The Canadian dollar has returned to the levels seen at the start of the week, with the GBPCAD once again falling above 1.74 (interbank) as markets prepare for the Bank of Canada’s decision on interest rates. next week. The meeting comes with the BOC having already cut rates 3 times in March to help rebalance the Canadian economy while the virus stopped business.
The central bank is said to have called 52 large companies and 11 other industry experts to better understand the areas of the economy most affected, with energy companies showing the most signs of concern. Experts have already pointed out that the impacts on the oil sector could prove to be significantly worse than the accidents of 2008 and 2015.
Since oil is Canada’s main export, a deterioration in yields here could cause the Canadian dollar to weaken. Something to consider if you have a long term requirement in Canadian dollars.
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The main employment data published today at the start of the afternoon, including the unemployment rate and the net change in employment provided by Statistics Canada, could prove to be the main market drivers for the employment rates. changes from CADGDP. The current consensus on the latter that 350,000 more people will apply for unemployment, against only 30,000 compared to the previous version.
Investors may be watching closely given the seismic rise in unemployment in the United States due to the accelerated spread of COVID-19. It will be interesting to see if a similar jump could surprise the markets and therefore increase the volatility of the Canadian dollar exchange rates. It should be noted that these press releases may well have an influence on the Bank of Canada’s next interest rate decision, which is expected to be made mid-term next week and could therefore have additional weight with investors.
Just yesterday, Canada’s largest bank, Royal Bank of Canada, confirmed that it had already delayed a quarter of a million in mortgage payments and other loans to help ease the pressure on customers since the virus epidemic. The problem is that not all banks have the same financial strength as RBC in terms of capital and liquidity, which could in the long term force the BoC to make additional concessions to guarantee compliance with the loan conditions.
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