CAD/USD Declines But CAD/GBP Rallies As Pound Softens

Published: 12 Nov at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Canadian Dollar, USA, Canada,

While the ‘Loonie’ advanced yesterday as investors speculated that improving US growth would support Canada’s economic recovery, the commodity-driven asset slumped against the ‘Greenback’ today as a US business gauge impressed and lent the US currency support.

After the US Chicago Fed activity index came in at 0.14 in September, up from a positively revised 0.13 but slightly below economists’ 0.15 expectation, the Canadian Dollar slipped close to a two month low against the ‘Buck’.

The Canadian Dollar was trading against the US Dollar in the region of 0.9531 as of 16:51 GMT

The currency’s movement prompted this response from currency analyst Eimear Daly; ‘The Fed is going to start tapering this year and hopefully finish it up by the end of next year, so I think we’ve seen the Dollar regain some ground today, especially against the CAD. We’ve seen a backup in interest rates in the US and that really backs up the Fed going in and cutting’ stimulus.

The ‘Loonie’ also lost ground against the Euro ahead of tomorrow’s industrial production figures for the currency bloc.

However, with the Bank of England’s upcoming inflation report piling pressure on the Pound the Canadian Dollar was able to strengthen against its British rival.

Sterling broadly softened today after UK inflation was shown to have slowed by more than expected, advancing by 2.2 per cent year-on-year in October rather than the 2.5 per cent forecast.

The Canadian Dollar was trading against the Pound in the region of 0.5987 as of 16:53 GMT.

With significant Canadian data limited until Thursday, UK news is likely to drive movement in the CAD/GBP pairing tomorrow.

UK employment data is scheduled for release from 09:30 GMT while the Bank of England will deliver its quarterly inflation report at 10:30 GMT.

Meanwhile, US mortgage applications data and the US monthly budget statement could impact the CAD/USD pairing.
As of Tuesday, 12th November 2013, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1824, GBP USD exchange rate was 1.589, and GBP CAD exchange rate was 1.6672.

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