UPDATE
The Euro to Canadian Dollar (EUR/CAD) exchange rate rallied by around 1.1% on Friday afternoon.
After Canadian Gross Domestic Product showed that the nation had fallen into recession, the ‘Loonie’ (CAD) edged lower versus its currency peers. The depreciation was somewhat slowed, however, given that the Bank of Canada (BOC) already warned that recession was likely in the wake of rapidly falling oil prices. BOC officials are confident growth will pick up in the second-half of the year although crude prices are showing little sign of a return to the upside.
The Euro to Canadian Dollar (EUR/CAD) exchange rate is currently trending in the region of 1.4380.
Earlier…
Euro (EUR) Exchange Rate Forecast to Strengthen against the ‘Loonie’ (CAD) thanks to Positive Eurozone Core Inflation
The Euro to Canadian Dollar (EUR/CAD) exchange rate advanced by around 0.7% on Friday morning.
In response to better-than-expected Eurozone core inflation, the shared currency strengthened versus the majority of its most traded currency rivals. The Eurozone Core Consumer Price Index advanced to 1.0% on the year in July; bettering the median market forecast 0.8%. The Eurozone Consumer Price Index Estimate held at 0.2% on the year in July. Mixed results from German Retail Sales data had minimal impact on Euro movement, although the monthly decline of -2.3% in June will be of concern.
‘The preliminary data released by Eurostat on Friday showed the inflation as measured by the consumer price index (CPI) stayed unchanged at 0.2%, but core inflation ticked higher to 1.0% from 0.8% in June. While prices have risen for the past three months, inflation remains well below the ECB’s goal of just under 2%. The International Monetary Fund (IMF) earlier this week said low inflation was a risk to the Eurozone economy and added that the ECB shall have to extend its QE program beyond September 2016. As per the ECB forecasts, inflation is expected to remain low in the short run before it picks up and rises to 1.5% in 2016. However, lower energy prices pose a major downside risk to the ECB’s inflation target,’ stated Omkar Godbole writing for FXStreet.
The Euro to Canadian Dollar (EUR/CAD) exchange rate is currently trending in the region of 1.4323.
Canadian Dollar (CAD) Exchange Rate Forecast to Soften against the Common Currency (EUR) ahead of Growth Data
As traders await Canadian growth data due for publication later on Friday afternoon, the Canadian Dollar softened versus the majority of its currency rivals. This is due to speculation that the data will print poorly given the large depreciation in oil prices.
Credit Agricole analysts predict an economic slowdown, stating; ‘The chief driver of the economic slowdown remains the second round effects of the sharp drop in oil prices. The slowdown in mining and energy-related activities has weighed on growth. Indeed, in June the mining industry showed a 2.6% decline from the month prior, coinciding with a 6.4% decline in annual terms. Services failed to offset the contraction from the goods-producing sector with manufacturing also denting the growth numbers. The uptick in retail sales at the end of period should help offset some of weakness in goods producing sectors but not by enough to get growth back above zero.’
The Euro to Canadian Dollar (EUR/CAD) exchange rate was trending within the range of 1.4200 to 1.4335 on Friday morning.