The Euro to Canadian Dollar (EUR/CAD) exchange rate softened on Thursday as the ‘Loonie’ received support from a rise in oil prices and the Euro came under pressure from disappointing domestic data.
The Euro to Canadian Dollar (EUR/CAD) exchange rate hit a session low of 1.415
Oil prices rallied following a two-day long decline and rose by more than a $1 to reach $56 per barrel. The cause for the rally was down to the weakening of the US Dollar, which fell because of disappointing jobless claims and retail sales data releases.
The sharp declines in oil prices over the past few months have had a huge negative impact upon the Canadian Dollar and Canadian economy.
Crude oil is the nation’s most exported commodity. The decline spurred the Central Bank of Canada to make the surprise decision to cut interest rates in January.
Economists are speculating that the bank may cut rates again next month due to there being few signs that prices will make a sustained rally.
Also sending oil prices higher was news that a sandstorm hit Kuwait, an event that disrupted exports out of the oil rich nation. The Kuwaiti government said that exports of oil would be suspended until the weather in the region improves.
Data showing that new home prices in Canada rose by 0.1% also lent some support to the ‘Loonie’.
Ukraine Ceasefire Buoys Sentiment
The Canadian Dollar also received support from news that negotiations between Germany, France, Ukraine and Russia resulted in preliminary peace deal for Ukraine.
Over the past few days, fighting in the war torn east of the country had escalated as both sides attempted to capture as much territory as possible before the peace talks.
The talks resulted in a ceasefire, which is due to begin on Sunday February 16. The announcement lifted sentiment towards riskier commodity and emerging market assets.
Euro data disappoints
The Euro meanwhile remained under pressure from concerns over negotiations between Greece and its creditors.
Crunch talks held on Wednesday ended in a stalemate but traders are optimistic that a deal will be reached before Greece runs out of cash, which it will do by the end of February.
The Euro was also under pressure due to the release of disappointing regional data. Production fall by -0.2% on an annual basis, and inflation in Germany fell into negative territory for the first time in five years.
Euro Exchange Rate News:
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