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Current Developments Means CAD Could Suffer for the Foreseeable

Although there was promise for CAD early on, it has been reported that the currency could be at risk over the next few days.

Current Developments Means CAD Could Suffer for the Foreseeable

Analysts have advised that many will avoid investing in CAD while they wait on the interest rate decision due on Wednesday 6th March 2019 by Bank of Canada.

This added to the fact that Canada’s performance in the forex market has been uninspiring, means that more and more risk is being found with the currency.

There is a general election due later in the year, and the lack of agreement in relation to replacing the North American Free Trade Agreement has still not been accepted, which again causes more uncertainty in the forex market.

The recent arrest of Huawei executive Meng Wanzhou has also created a diplomatic feud, which could also affect Canadian relations with China.

There have been a series of moves by China that are speculated to be a response to the Government blocking Huawei from entering the country’s 5G mobile network.

These moves include a reported ban on importation of high-grade coals. If this is the case, then Canada could face more of the same should its extradition of Wanzhou to the US go ahead.

Despite some misgivings, there is some confidence due to how much of a supportive force The Bank of Canada has been in relation to CAD throughout 2017 and 2018.

Related:  Retail sales and inflation bears down on the Canadian Dollar

Interest rates have been raised by the BoC and this looks to be a trend that will continue. The hike put in place by BoC could initiation of higher interest rates, which of course can be alluring to potential investors.

In October 2018, BoC increased its interest rate to 1.75%, which was the third rise of 2018, with a pledge being made that more rates were to be increased in 2019.

Unfortunately, the BoC backtracked on this statement which meant that CAD bore the brunt of these decisions. Should a rate cut be delivered, then CAD could continue to struggle moving forward.

Figures from Gross Domestic Product Raises Scepticism

A disappointing fourth quarter was partnered with the waiting of a policy decision on Wednesday means many investors are likely to hold out until further information is revealed.

There could be many reasons as to why GDP is low, but when aligned with other factors, such as uncertainty on trade deals, shines more light as to why investors remain to be wary.

Like many sectors of the forex market, investors will need to stay abreast of news affairs to ensure that they’re making the right investments at the right times.

Like many other currencies, there is likely to be several changes in the market depending on the decisions made by world leaders.

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