While inflation concerns pushed the Euro lower against the peers like the Pound and US Dollar, the common currency was stronger against the ‘Loonie’ ahead of the Bank of Canada’s rate decision.
During local trading the Euro came under pressure as inflation data for the 18-nation currency bloc confirmed that consumer prices gained at their slowest pace since November 2009. The figures support the case for European Central Bank intervention.
Inflation has been languishing below 1 per cent for six consecutive months and is becoming a real concern for many investors.
The annual Eurozone inflation rate was 0.5 per cent last month, down from 0.7 per cent the previous month.
However, economist Gizem Kara did note that a rebound in core inflation is expected in April as ‘some of the Easter-related seasonal price increases are likely to come with a month’s delay.’
Although the Euro eased lower against a bullish Pound and fluctuated against the US Dollar, movement was restrained ahead of the upcoming four-day weekend.
But the Euro was able to rally against its Canadian counterpart this afternoon as the Bank of Canada acted as economists expected and held interest rates at current levels while maintaining a neutral bias.
After its latest policy meeting the BOC asserted; ‘The Bank continues to see a gradual strengthening in the fundamental drivers of growth and inflation in Canada. The timing and direction of the next change to the policy rate will depend on how new information influences the balance of risks.’
The central bank also reiterated that underlying inflation is likely to remain below target for some time and that monitoring the downside inflation risks in key.
Canadian growth forecasts were negatively revised, with national GDP expected to expand by 2.3 per cent in 2014 rather than the 2.5 per cent growth anticipated back in January.
The Canadian Dollar broadly softened following the BOC announcement and the Euro capitalised on the commodity-driven currency’s weakness.
Bloomberg News quotes one industry expert as stating; ‘They are maintaining that really dovish stance that’s categorised ‘Loonie’ performance over the last couple of quarters. Until we see an uptick in key metrics such as business investment they are very mindful that policy is going to stay on the loose side’
Tomorrow’s Canadian inflation figures may well spark additional Canadian Dollar movement before the weekend.
Euro (EUR) Exchange Rates
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