Canadian Dollar Forecasts vs British Pound, US Dollar and Euro

The slump seen in the commodity dollar complex - particularly the slide lower in the NZ dollar and AUD - has ensured the CAD is left on the back-foot against the pound sterling and US dollar.

(For our late October forecast from Danske Bank please see here).

There is also the issue of the rampant USD bull-run which is keeping CAD buying interest suppressed:

"The loonie’s latest leg lower stems in part from expectations that the U.S. jobs report Friday will reveal a stronger pace of monthly hiring, and thereby keeping the Fed on track to raise rates next year. By contrast, the Bank of Canada has signaled a steady as she goes outlook for area borrowing rates, weighing on the loonie’s allure," says Joe Manimbo at Western Union.

Keep an eye on falling oil prices, the CAD has been sensitive to such moves in the past, and could do so once agian.

At the time of writing though we are seeing a little strength in the Loonie:

The pound to Canadian Dollar exchange rate: 0.18 pct lower, 1 GBP = 1.8125 CAD.
The euro to Canadian Dollar exchange rate: 0.35 pct lower, 1 EUR = 1.4096 CAD.
The US Dollar to Canadian dollar exchange rate: 0.13 pct lower, 1 USD = 1.1184 CAD.

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Forecast for the Pound / Canadian Dollar Rate

Has the pound shaken off its poor form against the CAD yet? Shaun Osborne at TD Securities says the move higher could yet have further distance to run:

"GBPCAD has made a little more progress higher over the past week, finally shaking off the extended weakness seen through the latter part of August and into early September.

"The strong bounce in the September 8th week (forming a bullish, weekly piercing line) really signaled that a low point was forming and subsequent gains through the 1.80/1.81 resistance zone suggest that the cross should be able to ratchet a little higher still in the weeks ahead. GBP gains have stalled around 1.8145 retracement resistance over the past few sessions but the move up still looks to have legs; we think a return to 1.83/1.85 is  not an unreasonable target."

Euro to Canadian Dollar Forecast

Against the euro Osborne says any weakness will likely be tempoary in nature:

"EURCAD’s track lower has steadied somewhat since the heavy selling seen through the middle of the month after the EUR strongly rejected resistance in the 1.44 area and turned lower again. At best, the EUR seems to be consolidating again, however, awaiting an opportunity to resume the push lower.

"Sideways range trade over the past two weeks is developing a potential “bear flag” signal on the short-term charts which should mean limited upside potential (1.4180/90) and more downside risk below 1.4130/35 (“bear flag” base). We continue to target a decline to the 1.35/1.38 range. Sell rallies."

US Dollar to Canadian Dollar Exchange Rate Forecast

According to Osborne the dollar's rally against the CAD could be due a break:

"USDCAD’s daily technical picture also looks potentially toppish in the short-term. Price action so far today suggests that the market is reluctant to push on through the high 1.11s—top of the channel in place since July—with price action forming a potential “doji” candle (stalling signal) today. A stall and sharp turn lower tomorrow should signal a short-term peak.

"The broader trend higher remains well-entrenched but does appear to be weakening modestly on the short-term charts. If there is any weakness in funds ahead, we think downside potential is limited at present; the overall move higher is deeply entrenched in the market so as to preclude a significant correction."