The Canadian dollar plunged after the Brexit news hit the markets. Risk aversion triggered a demand for safe haven assets like the USD, JPY, CHF and Gold. The CAD was under pressure as oil depreciated and the USD rose as the full economic impact of the British vote is still uncertain.
Canadian Prime Minister Justin Trudeau was quick to reassure Canadians about the economic outlook. The PM mentioned that Canada is well positioned to weather the global market uncertainty as it has done in the past. He also thanked outgoing British PM David Cameron who will step down in October after backing the losing side of the Referendum he proposed.The USD/CAD has gained 1.48 percent in the last 24 hours. The pair is trading at 1.2948 after the historic result of the UK EU referendum. A flight to safety triggered a rapid depreciation of the loonie. The currency was close to breaking above the 1.31 price level. The three major factors affecting the CAD remain: the Federal Reserve rate decision, the Brexit outcome and the price of oil. The surprise Brexit win has triggered risk aversion and put downward pressure on the price of energy, while the Fed is now likely to remain on hold for the rest of the year.The yellow metal surged after the news of a Brexit triggered a flight to safety. Investors flocked to gold seeking a safe harbour from the uncertainty of the UK leaving the European Union. The XAU/USD gained 4.055 percent in the last 24 hours. Gold jumped almost $100 to $1,350 for the daily high and is now trading at $1,314.
Next week will not bring any further guidance to investors who continue to be in shock about the unprecedented referendum outcome. CAD trades will focus on U.S. and Canadian gross domestic product releases. While in the U.K. the current account and manufacturing purchasing manager index will add some fundamentals for the pound to trade on.
CAD market events to watch this week:
Tuesday, June 28
8:30am USD Final GDP q/q
10:00am USD CB Consumer Confidence
Wednesday, June 29
10:30am USD Crude Oil Inventories
Thursday, June 30
4:30am GBP Current Account
8:30am CAD GDP m/m
8:30am USD Unemployment Claims
9:00pm CNY Manufacturing PMI
9:45pm CNY Caixin Manufacturing PMI
Friday, July 1
4:30am GBP Manufacturing PMI
10:00am USD ISM Manufacturing PMI
*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar
About Alfonso Esparza
Senior Currency Strategist, OANDA, Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto. Follow on Twitterand on his Google+ profile.