The Euro (EUR) was able to move away from a session low and its lowest level in a year against the US Dollar (USD) but weakened against the Canadian Dollar (CAD) as news from Ukraine offered support to riskier assets.
With hopes of a peace plan in the air, the markets favoured the riskier assets and Euro on hopes that the negative impact on the global economy because of the standoff between the West and Russia will ease.
Russian President Vladimir Putin called for an end to the offensive launched by Pro-Russian Rebels in eastern Ukraine and called for the withdrawal of Ukrainian forces from residential regions.
Under the guise, that he is solely looking out for the nation’s civilian population and as not a means at seeking to assert Russian influence in the region investors saw the announcement as a positive.
‘The biggest risk to both a potential cease-fire and a possible larger political agreement would be that they might not be followed through. The lack of clear chains of command on both sides and the likely popular backlash in Kiev mean that any kind of agreement could easily fail even before it is supposed to come into effect,’ said an analyst.
Because of hopes for a peace deal being reached by as soon as Friday the Euro was able to advance against the US Dollar.
The ‘Greenback’ normally would have advanced due to the release of strong economic data but traders were more interested in events in Ukraine.
According to the Washington based Commerce Department, business orders in the world’s largest economy soared to a record high amount in July as demand for commercial aircraft surged.
Factory orders rose by 10.5% in July, the biggest one-month increase on record going back to 1992 as orders for civilian jetliners rose four-fold. However, excluding transportation, orders actually edged down 0.8% and a key category that serves as a proxy for business investment plans fell 0.7%.
The Canadian Dollar advanced against the Euro, US Dollar and other major peers after the Bank of Canada left interest rates unchanged at 1% after it stated that slack is keeping the nations inflation rate in check.
“The Bank remains neutral with respect to the next change to the policy rate: its timing and direction will depend on how new information influences the outlook and assessment of risks,” said Bank of Canada Governor Stephen Poloz.
The Euro is forecast to experience volatility on Thursday due to the European Central Bank’s interest rate decision.
Economists are widely expecting that the bank’s policy makers will announce new easing measures in order to try and aid growth and tackle the threat of deflation taking root in the region.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3143 ,
Euro,,British Pound,0.7982 ,
Euro,,Canadian Dollar,1.4311 ,
Euro,,Australian Dollar,1.4066 ,
[/table]
