The Euro Canadian Dollar (EUR CAD) exchange rate slipped from its best levels this morning despite an uptick in the Eurozone’s latest Manufacturing PMI.
According to data published by IHS Markit Eurozone factory activity rose from 56.7 to 57.0 in May, striking its best levels since April 2011 and causing job creation to reach a 20-year high.
Chris Williamson, Chief Business Economist at IHS Markit said;
‘The Eurozone upturn is developing deeper roots as factories enjoy a spring growth spurt. Demand for goods is growing at the steepest rate for six years, encouraging manufacturers to step up production and take on extra staff at a rate not previously seen in the two-decade history of the PMI survey,’
Germany’s manufacturing sector helped to pave the way for the rise as factory activity in Europe’s largest economy surged from 58.2 to 59.5 over the same period, also reaching a 6-year high and offsetting a fall in Italy and France.
While this appears to be yet another sign that the Eurozone recovery is picking up pace the Euro’s gains were muted somewhat by analysts who do not expect it to cause the European Central Bank (ECB) to alter its outlook on raising interest rates when it gathers for its latest monetary policy meeting next week.
Meanwhile the Canadian Dollar remains chained to recent fluctuations in the oil market despite a strong GDP reading on Wednesday.
Figures released yesterday showed that Canada’s economy grew an impressive 0.9% in the first quarter, up from 0.6% at the end of 2016 and becoming the fastest growing G7 country over the period.
However the jump was not enough to attract investors, who shied away from the ‘Loonie’ following a notable drop in oil prices.
Crude benchmarks fell to a three-week low yesterday following the news that an uptick in Libyan oil production caused the Organization of the Petroleum Exporting Countries (OPEC) to overshoot its production targets in May.
Investors hopeful for more meaningful cuts from the cartel were also left disappointed by the group last week as it announced that it would only be extending the cuts and not implementing a more aggressive target.
Looking ahead the EUR CAD exchange rate may strengthen later this afternoon as economists predict that the latest Canadian Manufacturing PMI will show a slight slowdown in factory activity last month after striking a six year high in April.
Meanwhile a lull in notable Eurozone data will likely see investors look towards next week’s Services PMI’s, with the single currency likely to strengthen if the latest Eurozone reading shows that the bloc continued to show growth in May.
Current Interbank Exchange Rates
At the time of writing the EUR CAD exchange rate was trending around 1.5135 and the CAD EUR exchange rate was trending around 0.6604.