By Sam Coventry

The Canadian dollar (CAD) has continued to march to its own beat and ignored issues concerning Emerging Markets. The forecast is however biased to further CAD declines.

The pound sterling to Canadian dollar exchange rate (GBP/CAD) is 0.34 pct lower at 1.8431.The euro to Canadian dollar exchange rate (EUR/CAD) is 0.57 pct higher at 1.5164.The US dollar to Canadian dollar rate (USD/CAD) is 0.13 pct lower at 1.1139.Be Aware: All CAD quotes are taken from the inter-bank markets. Your bank will deliver your currency after levying a spread on the rate. However, an independent FX provider will guarantee you a more competitive spread, thus delivering up to 5% more currency. Please learn more here.

The big talk on the foreign exchange markets over the course of the past 24 hours involves Turkey and Emerging Market currencies aka. Emerging Market (EM) curencies.

A bold interest rate hike executed by the Turkish central bank has brought some calm to beleaguered Emerging Markets.

What does this mean for the Canadian currency? Well, it depends who you ask.

"The CAD has been aloof to EM FX volatility to some degree—it held up well earlier in the week as the TRY came under severe pressure, for example—and continues to march more or less to its own beat," notes Shaun Osborne at TD Securities.

However, Stephen Gallo at BMO Capital argues that EM volatility does indeed have a role to play in Canadian dollar valuations:

"USD-CAD retained its generally positive correlation with ‘risk’ during the London morning. Fluctuations in the pair were mainly a product of fluctuations in global equities and key developing market currencies. So, the push up in USDCAD to the high above 1.118 reflected stabilisation within the EM space following Turkey’s rate hikes."

Forecasts for the Canadian dollar exchange rate

Gallo says the outlook for the Canadian dollar today rests on the outcome of the US FOMC Meeting. Regarding the US dollar to Canadian dollar rate (USD/CAD):

"With a further $10bln taper today, we expect to see the pair settle anywhere within the 1.1100-1.1225 range. A neutral Fed and further EM stabilisation therefore suggests participants should look to buy on dips in the 1.113-1.115 range, aiming for 1.120-1.125 leading into Friday."

"USDCAD is moving nicely to the upside, most likely trading higher within impulsive structure after recent strong and sharp extended move up from 1.0580. Based on the personality of the move and acceleration after break out of the base channel, we suspect that pair is in wave three of three, typically the strongest wave in the sequence," says a note from EW Forecast:

However, EW Forecast see some Fibonacci levels at 1.1200 and 1.1380 zone where pair may find a temporary resistance, but only temporary for a pullback down in black wave 4 to that base channel where upper trendline may cause a new leg up on the pair.