Canadian Dollar Exchange Rates SURGE: CAD Up Against British Pound, US Dollar + Euro

The Canadian dollar exchange rate complex is seeing a powerful rally through the end of the week thanks to a strong data release out of Canada.

A look at the latest CAD rates on Friday shows gains made over the past 24 hours have stuck. At the end of the Thursday session we saw:

• The pound sterling to Canadian dollar exchange rate is 0.77 pct in the red having attained a rate of 1.8340.
• The euro to Canadian dollar exchange rate is 1 pct lower at 1.5001.
• The US dollar to Canadian dollar rate is 0.69 pct lower at 1.0825.

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Why is the Canadian dollar exchange rate complex higher?

Driving Canada's dollar higher is the release of strong Housing Starts data. Year on year numbers for April came in at 194.8K, well ahead of analysts estimates for 175K.

This tells us that the underlying picture in Canada may not be as bad as some in the currency markets are currently discounting into the C$.

Indeed, chances of a rate cut from the BoC are seeming increasingly remote now.

"Today’s numbers should entice more interest as they provide a peak into Q2 activity and an upside surprise would set a positive tone ahead of tomorrow’s employment numbers," says Shaun Osborne at TD Securities.

Outlook for the Canadian dollar

Concerning the outlook for the US dollar to Canadian dollar exchange rate, Camilla Sutton at Scotiabank says:

"We expect USDCAD to continue trading either side of 1.10, favouring downside (CAD strength) in the near‐term likely taking a test at 1.0750; in the more medium term we expect USDCAD to remain comfortable trading between 1.0750 to 1.1200.

"The already sustained depreciation in CAD combined with a U.S. recovery and $100 oil price is a powerful combination for the Canadian
fundamental backdrop; however any excessive CAD strength is likely to
be met by a cautious central bank."

Euro exchange rates: ECB on hold but Draghi sinks the currency

The euro dollar exchange rate had moved higher on Thursday as the ECB kept policy unchanged.

We have however seen a sharp reversal in fortunes for the shared currency in the press conference that followed the announcement.

The euro sunk after ECB President Draghi hinted that there could indeed be some action at the Bank's next policy meeting in June.

However, some commentators are suggesting that markets are falling for empty words again - how often have we heard Draghi talk hard on interest and exchange rates only to do nothing?

We doubt any sell-off will be too deep, and if anything recent ranges may continue to be traded.