Canadian dollar hits almost 12-week low against the US dollar
On Friday 25th October the Canadian dollar continued to weaken against the US dollar; a low that has lasted almost 12 weeks. Contributing factors to the further decline of the Canadian dollar were due to an interest rate cut by the Bank of Canada earlier in the week by half a percentage point, coupled with an uncertain outlook for the global economy following the US Presidential Election.[1]
For October, the currency suffered its most significant monthly decline since September 2022.[2]
Euro strengthened as Germany avoids recession
The euro strengthened on Wednesday 30th October following the release of the Eurozone’s latest GDP figures that surpassed expectations.
GDP figures in the bloc were lifted by an expansion in German GDP, narrowly avoiding a recession, which surprised markets.[3]
Sterling up-and-down
On 18th October, the pound US dollar (GBP/USD) exchange rate strengthened after the announcement of positive UK retail sales data. Data from the Office of National Statistics (ONS) showed that British retail sales had grown by 0.3% in September.[4]
The pound fell following the Autumn Statement delivered by the UK Chancellor, Rachel Reeves, on 30th October and suffered the worst two-day loss against the euro in two years.[1] It also weakened against all other major currencies apart from the US dollar. However, an increase in borrowing helped to bring stability to the pound.[2]
The fall in the value of the pound was due to the contents of the new budget, which included the biggest tax increase since 1993, along with changes to the government’s fiscal rules.[3]
US dollar relatively stable
Despite the publishing of better-than-expected US S&P PMI data on 24th October [4], the US dollar fell against major currencies because of its safe-haven currency status.[5]
The GBP/USD exchange rate fluctuated following the UK Autumn Statement, with the pound holding its ground against the US dollar but falling against other currencies.
The US dollar stabilised against most currencies on 30th October following the release of the latest US GDP figures.[6]
Japanese yen weakens
As a result of the Japanese election, causing political and monetary policy uncertainty, the yen averaged a three-month low against the US dollar on 28th October.[7]
On 31st October, the Bank of Japan announced the maintenance of its low interest rates. The US dollar fell briefly against the yen after Mr. Ueda, Governor of the Bank of Japan, stated that the risks to the US economy were becoming less. His comments were perceived by markets as laying the groundwork for a potential rate hike in December 2024.[8]
[8] https://www.reuters.com/markets/asia/boj-keep-rates-steady-politics-muddles-outlook-2024-10-30
