Global factors may have more of an influence on this week’s EUR CAD exchange rate forecast with the Jackson Hole symposium due to be held on Friday. As risk sentiment and oil prices slipped on Monday, the Canadian Dollar was left in a weak position, allowing the Euro to advance.
- EUR CAD Exchange Rate Forecast to Beat 1.46 – If Eurozone stats impress
- Oil Prices Boost ‘Loonie’ – Iran indicates it could help with oil market issues
- Forecast: Eurozone PMIs on Tuesday – How is the Eurozone economy performing in August?
- Forecast: Jackson Hole Symposium on Friday – Optimistic Federal Reserve means weak ‘Loonie’
EUR CAD Exchange Rate Plummets as Oil Freeze Bets Improve
The Euro plummeted against the oil-correlated Canadian Dollar on Tuesday afternoon, as the Euro was weakened by the day’s underwhelming Eurozone ecostats while the Canadian Dollar soared on the latest oil news.
Eurozone PMIs and consumer confidence figures didn’t show the improvement that some analysts had hoped for, with German activity slowing and Eurozone consumer confidence worse than in July.
The Canadian Dollar, 0n the other hand, received a burst of sentiment on Tuesday afternoon after it was reported that Iran was also willing to assist with production freeze talks in order to support the oil market.
Overproduction and oversupply of oil have been the primary reasons for the commodity’s dwindling prices. Following the report, oil prices experienced a sharp uptick and the ‘Loonie’ also surged.
(Previously updated 15:56 BST 22/08/2016)
EUR CAD Exchange Rate Forecast to Lose Ground if PMIs Disappoint
The Euro continued to advance higher against the Canadian Dollar on Monday afternoon as demand for risk-correlated currencies continued to fade.
The Canadian Dollar also plunged across the board thanks to a sudden drop in oil prices. While sentiment towards the commodity was shaky when markets opened this week, news that oil prices had fallen almost 3% on Monday alone undermined the ‘Loonie’.
Previously hovering around the key level of US$50 per barrel, prices of Canada’s most lucrative commodity dropped to US$49.16.
Economists have suggested that oil’s August rally had been over-bullish, and as the US Dollar strengthens and bets of an oil producing nations freeze deal wane, oil looked less appealing in markets.
However, there is still potential for the Canadian Dollar to recover if Tuesday’s Eurozone PMIs disappoint. This could send the shared currency to plunge across the board, but its losses may be muted if Canadian Dollar demand remains as low as it has been today.
(Published 11:19 BST 22/08/2016)
The EUR/CAD exchange rate successfully advanced last week, regaining much of the ground it lost in the face of the Canadian Dollar’s August rally. The pair began last week near a low of 1.4432, and gained over a cent to reach a weekly high of 1.4595 by the weekend.
Euro (EUR) Limp Ahead of Tuesday Stats
The Euro (EUR) has been in a solid position in recent weeks thanks to the publication of stats indicating that the Eurozone’s economy was minimally effected by Britain’s Brexit vote.
Around the time of the EU Referendum, speculation was rife that a Brexit would affect the Eurozone almost as badly as the UK. However, data released throughout July and early August indicated that this wasn’t the case, causing the Euro to enjoy a significant increase in demand.
Last week’s Eurozone data included July Consumer Price Index (CPI) scores, which contracted worse than expected month-on-month but still cheered investors by bringing the yearly inflation score to 0.2%.
This was followed by a mixed minutes report from the European Central Bank (ECB). The bank took a ‘wait and see’ stance and was careful to reassure that it would not rush into expanding monetary policy following the Brexit vote.
On Monday, the Euro was relatively limp, seeing mixed movement against many rivals as investors adjusted ahead of the week’s key datasets.
While July’s PMIs indicated that the Brexit had not affected the Eurozone in any considerable way, concern over August’s PMIs potentially coming in below expectations weighed the Euro down.
Canadian Dollar (CAD) Weakened on Canadian News, Oil Prices
After a rally that lasted well over a week, the Canadian Dollar’s luck appeared to run out last Friday as yet more underwhelming Canadian news undermined the ‘Loonie’s strength.
Prices of oil, Canada’s most lucrative commodity, had been rallying for the last week due to news that oil producing nations would have new talks on oil production freezes. Prices of the commodity had reached over US$50 per barrel by Friday.
Recent issues with oil prices have been largely due to oversupply of the commodity, and as a result the possibility of lower output, lower supply and increased demand often causes oil prices to improve.
Unfortunately, domestic Canadian data held the Canadian Dollar down on Friday. Canadian retail sales contracted -0.1% in June despite being expected to improve from 0.2% to 0.5%. Consumer prices also worsened, from 0.2% to -0.2% month-on-month and 1.5% to 1.3% year-on-year.
The Canadian Dollar’s slump continued on Monday as investors reacted to the weekend’s news. This included Federal Reserve Vice Chair Stanley Fischer taking a hawkish stance towards the US economy. This caused the US Dollar to strengthen and take strength away from its Canadian rival.
Lastly, oil prices also began to slump on Monday as markets reassessed the likelihood of an oil production freeze. Economists began to suggest that August’s oil rally had been overblown, and the increasing value of the US Dollar also weighed on prices of the commodity.
EUR CAD Exchange Rate Forecast: Eurozone Economic Activity Data Ahead
Tuesday will see the publication of the Eurozone’s preliminary August Purchasing Managers’ Index (or PMIs).
In July, these were a vital indication of the Eurozone’s resilience to the Brexit vote – and as a result investors will be hoping for August’s to follow suite. If these come in below expectations, it could stoke worries that the Brexit has affected the Eurozone economy after all.
However, if they beat expectations the Euro could be on track to continue its current sturdy streak. Tuesday’s Eurozone consumer confidence report may also boost the Euro if it beats expectations.
Other key Eurozone prints due out mostly include German data, such as German GDP on Wednesday, IFO reports on Thursday and German consumer confidence on Friday.
As for the Canadian Dollar, this week’s Canadian economic calendar is barren. This means that the risk-correlated Canadian Dollar will be left to ride the flows of risk sentiment in the market.
Key factors for this include prices of oil, which could continue to slump, as well as US Fed rate hike bets. Friday’s symposium at Jackson Hole, Wyoming USA, could be vital for risk-correlated movements as a hawkish Fed at that event would cause risky currencies to plummet and the US Dollar to soar.
At the time of writing, the EUR CAD exchange rate trended in the region of 1.4580, while the CAD EUR exchange rate traded at around 0.6857. An upward trend is likely for the EUR CAD exchange rate forecast.
