The Canadian Dollar: Tipped to Rise after Oil Price Spike

The Canadian Dollar pared gains from the overnight session during early trading Monday but could continue to receive support in the coming days from spike in the oil price brought on by a supply shock and fresh fears of conflict in the Gulf after Iran was accuse of an attack on a Saudi Arabian oil facility.

The Pound-to-Canadian-Dollar rate is set to begin trading around 1.6602 this week after closing the previous one around 2.63% higher on Friday, which kickstarted a new uptrend that is poised to extend further over the coming days.

The Canadian Dollar is at risk of softening over the coming weeks as investors turn their attention to the looming general election set for late October, with details of the various policy platforms as well as ebb and flow of opinion polls now likely to have an impact on Loonie exchange rates, according to BMO Capital Markets. 

For GBP/CAD, a break above the 1.6335 highs would probably give the green light to a continuation higher to a target at 1.6445 and the late July highs.

The Canadian Dollar followed oil prices, other risk assets and domestic bond yields higher Thursday after the Bank of Canada (BoC) suggested it will 'wait and see' how the U.S.-China trade war impacts the economy before deciding whether to lower its benchmark cash rate, setting it apart from most others in the G10 crowd.

The Canadian Dollar extended gains over rivals Wednesday after the Bank of Canada's (BoC) left its cash rate unchanged and neglected to give a strong hint about any cuts that might be likely for the winter months, instead tying future policy decisions to developments in the U.S.-China trade war. 

The GBP/CAD exchange rate is trading at around 1.6184 at the time of writing after falling almost 0.84% in the previous week, but despite this weakness, studies of the charts are constructive and suggest the pair will probably move higher in the week ahead.

The Canadian Dollar raised a proverbial roof Friday after official data showed the economy growing much faster during the second quarter than the market had dared imagine, although much about the outlook for the Loonie depends on next week's response from the Bank of Canada (BoC).