The Euro to Canadian Dollar exchange rate (EUR/CAD) softened as the Euro reversed earlier gains in response to comments issued by the European Central Bank.
After the ECB announced that interest rates and fiscal policy would remain unaltered for another month the Euro advanced on its rivals.
However, the Euro went on to broadly soften as ECB President Mario Draghi stated that the Euro’s strength is a serious concern and that additional policy might have to be introduced in June in order to shore up the Eurozone’s economic recovery.
Draghi commented; ‘The Governing Council is comfortable with acting next time, but before we want to see the staff projections that will come out in the early June. There wasn’t a decision today. It’s a preview of the discussion we will have next month.’
The Canadian Dollar’s advance on the Euro was also aided by positive domestic data.
According to figures compiled by the Canada Mortgage & Housing Corp. Canadian housing starts increased by more than anticipated last month, jumping from a negatively revised 156,600 in March to 194,800 in April.
The increase was considerable stronger than the result of 175,000 anticipated by economists and indicates that the ‘soft landing’ Canada’s housing sector is expected to experience might be a little further off.
Housing starts for urban multiple-units increased by 35 per cent, wiping out the previous month’s 26 per cent drop.
The CMHC report stated; ‘Over the reminder of the year, builders are expected to continue to adjust activity, particularly with respect to multiples, in order to manage inventory levels.’
As well as advancing on the Euro, the Canadian Dollar edged higher against the ‘Greenback’ after the data was released.
Separate figures showed that Canada’s new housing price index rose by 0.2 per cent in March, month-on-month, and 1.6 per cent year-on-year. The results were in line with expectations.
While tomorrow’s German trade balance data is likely to have an impact on the EUR/CAD exchange rate, investors will also be taking a keen interest in Canada’s employment figures – due out at 13:30 GMT.
The Canadian unemployment rate is expected to hold at 6.9 per cent in April.
A positive surprise from the data could be enough to push the Canadian Dollar higher.
Euro (EUR) Exchange Rates
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