The Euro to Canadian Dollar (EUR/CAD) exchange rate strengthened by around 0.13% on Tuesday morning.
In the aftermath of speech given by European Central Bank (ECB) President Mario Draghi, the shared currency advanced versus many of its most traded currency competitors. Draghi stated that the Eurozone economy is on track for a steady recovery, and that quantitative easing is already having a positive impact at this early stage.
The Canadian Dollar, meanwhile, softened versus many of its major rivals as a result of oil prices falling considerably. At just under $44 a barrel crude prices are showing little sign of a speedy recovery.
The Euro to Canadian Dollar (EUR/CAD) exchange rate is currently trending in the region of 1.3524.
Yesterday…
The Euro to Canadian Dollar (EUR/CAD) exchange rate rallied by around 0.73% on Monday afternoon.
With a key speech from European Central Bank (ECB) President Mario Draghi due later on Monday, the shared currency strengthened versus the majority of its most traded currency rivals. This is mainly due to speculation that Draghi will give a detailed account of the bonds purchased to finance quantitative easing in the Eurozone.
The Canadian Dollar, meanwhile, softened versus the majority of its most traded currency competitors despite positive results from domestic data. The sizeable depreciation can be attributed to crude prices falling below $45 a barrel.
The Euro to Canadian Dollar (EUR/CAD) exchange rate is currently trending in the region of 1.3522.
Euro (EUR) Exchange Rate Ticks Higher ahead of Draghi Speech
With ECB opacity causing divided opinions amid uncertainties regarding the asset purchasing program, the sheared currency advanced on Monday as traders await a speech by ECB President Mario Draghi. Many expect Draghi to give a detailed account of the bonds purchased to finance the injection of liquidity and outline future purchases.
Most analysts have noted that the QE is already having a positive impact, and that Euro weakness will drive economic recovery. ‘As the recovery gains steam, there should be a notable upward tick in headline and core inflation, supported by the depreciation of the Euro,’ Christopher Matthies, an economist at Sparkasse Suedholstein. The currency decline ‘is mainly caused by the upcoming tightening of the Fed and the QE program of the ECB,’ he wrote.
The Euro to Canadian Dollar (EUR/CAD) exchange rate dropped to a low of 1.3410 today.
Canadian Dollar (CAD) Exchange Rate Dives as Oil Prices Decline
As a commodity-correlated asset, the ‘Loonie’ (CAD) is sensitive to changes in crude prices. Oil has slid below $45 a barrel on Monday, causing the Canadian asset to soften versus most of its major peers.
‘Another wave of weakness hit the oil markets last week, and we expect it to continue,’ Societe Generale oil analyst Michael Wittner said. ‘The arithmetic works out to a combined build in crude oil and refined products of approximately 200 million barrels in March-June. Any way you slice it, this is bearish for prices.’
Canadian economic data printed positively but had minimal impact with so much downward pressure from crashing crude prices. International Securities Transactions, which shows the difference between imports and exports of goods, saw a surplus of 5.73 billion in January; eclipsing the median market forecast of a trade deficit of -2.00 billion.
Euro to Canadian Dollar (EUR/CAD) Exchange Rate Forecast to Hold Gains
Although the forthcoming speech from Draghi has the potential to provoke volatility, the significantly low oil price is likely to keep the Canadian Dollar trending lower. Therefore, the Euro to Canadian Dollar (EUR/CAD) exchange rate is likely to hold gains for the remainder of Monday’s trade.
There is a high likelihood of EUR/CAD volatility on Tuesday, however, with several influential European data publications due. The Canadian Dollar is likely to see movement in line with oil prices once again thanks to a lack of influential domestic data to drive changes.
The Euro to Canadian Dollar (EUR/CAD) exchange rate climbed to a high of 1.3569 today.