The Euro to Canadian Dollar (EUR/CAD) exchange rate advanced by around 0.28% on Monday afternoon.
Despite registering mixed results from domestic data which erred towards the positive, the shared currency declined versus the majority of its closest traded currency competitors. The depreciation can be linked to ongoing geopolitical upheaval in Greece, with expectations mounting that the Hellenic nation will default on International Monetary Fund (IMF) payments due this week.
The Canadian Dollar, meanwhile, slumped versus nearly all of its major peers on Monday after low crude prices exacerbated the downtrend initiated by weak manufacturing data. The ‘Loonie’ (CAD) depreciation is likely to continue as traders speculate on the subject of potential Bank of Canada (BOC) intervention.
The Euro to Canadian Dollar (EUR/CAD) exchange rate is currently trending in the region of 1.3685.
Euro (EUR) Exchange Rate Forecast to Strengthen versus the Canadian Dollar despite Greek Woes
Euro-area manufacturing data produced mixed results on Monday, causing the common currency to edge lower versus many of its most traded currency rivals. Whilst both Eurozone and German Manufacturing PMIs failed to meet with forecasts, Italian, French and Spanish Manufacturing bettered their respective market consensuses.
In relation to the Eurozone Manufacturing PMI, Markit economist Chris Williamson said; ‘The rate of growth is modest rather than spectacular and there are clearly countries which continue to struggle. Weakness is centred in the region’s core, with France’s manufacturing sector still in decline and Germany only seeing very meagre growth. On the other hand, Spain and Italy appear to be staging strong recoveries, benefitting in particular from impressive export performances. Such export gains point to improved competitiveness which bodes well for longer-term economic prospects. Manufacturers in France and Germany need to be mindful of such competition.’
The most significant reason for the single currency declination, however, is ongoing issues in Greece. With talks between Athens and creditors showing little sign of progress, the potential for a Grexit is hindering investor confidence. Furthermore, the feeling of upheaval was exacerbated after Greek Prime Minister Alexis Tsipras stated that he will not budge on the electoral red-lines or bow down to ‘ridiculous’ propositions.
The Euro to Canadian Dollar (EUR/CAD) exchange rate has fallen to a low of 1.3590 today.
Canadian Dollar (CAD) Exchange Rate Forecast to Soften Across the Board after Poor Canadian Data Fuels Rate Cut Speculation
With crude prices falling amid oversupply from the US, the commodity-correlated Canadian Dollar softened versus most of its peers. The depreciation was fuelled after the solitary Canadian economic data publication showed manufacturing remained in contraction territory. The RBC Canadian Manufacturing PMI came in at 49.8 in May, fractionally below the 50 mark which separates growth from contraction.
‘The manufacturing sector downturn is starting to reverse course in Canada, with the latest survey indicating a modest rebound in production volumes and an overall stabilization in export sales. While lower levels of energy sector capex continued to weigh on manufacturing performance, exchange rate depreciation has helped boost competitiveness and offset some of the weakness in domestic demand’ said industry expert Cheryl Paradowski. ‘A regional breakdown of the manufacturing PMI indicates particularly strong output and export sales growth in Ontario, while all regions except Alberta and BC recorded net job creation. Even in Alberta and BC, the overall downturn in business conditions was less marked than April’s survey-record low.’
Euro to Canadian Dollar (EUR/CAD) Exchange Rate Forecast to Hold Gains on Lack of Data
Given the absence of further domestic data publications to provoke changes for the pairing, the Euro to Canadian Dollar (EUR/CAD) exchange rate is likely to hold gains for the remainder of Monday’s European session. Tuesday ought to see heightened EUR/CAD volatility with German Unemployment Rate and Unemployment Change data due for publication, as well as Eurozone inflation figures scheduled for release.
The Euro to Canadian Dollar (EUR/CAD) exchange rate climbed to a high of 1.3704 today.
