The Canadian Dollar advanced to a three-week high against the Euro on Thursday as the single currency continued to weighed upon by yesterdays comments by ECB policy makers and the ‘Loonie’ found support from improving risk sentiment and rising commodity prices.
The ‘Loonie’ firmed thanks to an easing of geopolitical tensions due to G7 leaders agreeing to hold off on imposing potentially harmful economic sanctions against Russia. They said that the sanctions would be imposed only if Russia continues to escalate tensions in Ukraine or other former Soviet republics. NATO has stepped up its defences in Poland, Latvia and Lithuania in an attempt to deter any Russian aggression in the region.
The easing in tensions helped the Canadian currency continue to recover from last week’s sharp declines.
Also aiding the ‘Loonies’ rise was an increase in commodity prices with Canada’s biggest export of crude oil seeing a price increase.
With a lack of economic data releases this week the currency has moved with the flow of other riskier assets such as the Aussie Dollar or South African Rand.
Economists are expecting the ‘Loonie’ to spend the rest of the year relatively stable and subdued against its peers.
“Later in the second half of the year the CAD is expected to stabilize as a building US economic recovery combined with a sustained depreciation in the currency flow into the Canadian fundamental backdrop. An improved domestic outlook should see the BOC embrace its neutral tone,” said Camilla Sutton, chief currency strategist at Bank of Nova Scotia.
The next piece of data due for release for the CAD is due next Monday when the latest GDP figures are released. A strong showing there is likely to support the currency further.
Euro (EUR) Exchange Rates
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