The Euro (EUR) to Canadian Dollar (CAD) exchange rate fell to a four-day low on Tuesday as data out of the Eurozone came in below forecasts and as Manufacturing Sales data out of Canada boosted demand for the ‘Loonie’.
Economic sentiment data published by the ZEW Centre for Economic Research showed that sentiment in Germany and the wider 18-member Eurozone declined sharply in September due to concerns over the Ukraine crisis and this week’s Scottish Referendum vote.
According to the ZEW Centre for Economic Research, economic sentiment dropped by 1.7 points to 6.9 in September from the preceding month’s figure of 8.6.
Economists had widely expected the sentiment index to drop by 3.8 points to 4.8 this month. The Current Conditions Index deteriorated to 25.4 this month from 44.3 in August, worse than expectations for a decline to 40.0.
The wider Eurozone also saw a plunge in sentiment.
The ZEW index for the rest of the single currency showed that sentiment tumbled to a reading of 14.2 in September from the 23.7 figure recorded in August. The drop was far worse than analyst forecasts for a fall to 21.3.
On the index, a level above 0.0 indicates optimism whereas a level below 0.0 indicates pessimism.
The Euro has been under pressure ever since the European Central Bank announced a surprise interest rate cut to a new record low and announced a new easing programme in an effort to try to improve growth.
The Canadian Dollar meanwhile was able to make strong gains against a number of major peers after a report released by Statistics Canada showed that factory sales increased to a new record high in July, adding to signs that the North American economy is strengthening.
According to the data, Canadian factory sales increased by 2.5% to C$53.7 billion in July, beating the previous record of C$53.2 billion achieved in July 2008, before the Great Recession.
The Canadian currency was likely to experience volatility later in the session when Bank of Canada Governor Stephen Poloz delivers a speech on the role of the exchange rate on the Canadian economy.
On Wednesday, the ‘Loonie’ is likely to experience movement due the latest interest rate announcement by the U.S. Federal Reserve. Traders will be looking to see if the Federal Reserve will give any hints on whether it will raise interest rates sooner than mid-2015.
Euro Exchange Rate News:
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