Improved Eurozone Consumer Confidence Bolsters Demand for Euro (EUR) Today
Following a slightly stronger-than-expected finalised Eurozone Consumer Confidence Index for December the Euro (EUR) has been trending higher against the Canadian Dollar (CAD). Although Brent crude has climbed back above $36.50 on Tuesday morning sentiment towards the commodity-correlated ‘Loonie’ has remained more muted. Consequently, the EUR/CAD exchange rate is currently on an uptrend around 1.5211.
With the single currency (EUR) softened as a result of Sunday’s inconclusive Spanish election results the EUR/CAD exchange rate has trended lower on Monday morning.
Canadian Inflation Fell Short of Forecast to Bolster EUR/CAD Exchange Rate
After the Euro (EUR) was dragged down as a result of the Federal Open Market Committee’s (FOMC) decision to raise interest rates, the Euro to Canadian Dollar (EUR/CAD) exchange rate saw fresh volatility on Friday. Investors were generally disappointed as the latest Canadian inflation data failed to live up to forecast, with the year-on-year Consumer Price Index printing at 1.4% rather than 1.5%. While this did nevertheless demonstrate an uptick in inflationary pressure the monthly figure for November showed an unexpected contraction, suggesting that the domestic economy is continuing to struggle.
Weak German Producer Prices, Spanish Election Uncertainty Driving Down Euro (EUR) Today
Following Spain’s indecisive weekend election the single currency has been in weaker demand this morning, as current Prime Minister Mariano Rajoy’s conservative party fell decidedly short of achieving a parliamentary majority. With talks to form a coalition unlikely to see a speedy resolution pundits have been deterred by the renewed uncertainty facing the Spanish economic recovery. Confidence was also dented as German Producer Prices were found to have contracted further than forecast on the year in November, offering little encouragement that Eurozone inflation will show signs of picking up over the coming months.
The ‘Loonie’ has been trending higher against a number of rivals today, despite Brent crude having dropped to its lowest level since July 2004. As traders are increasingly concerned by the likelihood that the current supply glut will continue apace into 2016 the global benchmark softened to $36.17 per barrel, a slump worse than that seen during the peak of the global recession. However, sentiment appears to be generally more optimistic towards the Canadian Dollar ahead of comments from Bank of Canada (BOC) Governor Stephen Poloz.
EUR/CAD Exchange Rate Forecast: Eurozone Consumer Confidence Disappointment could Dent Single Currency
This afternoon’s finalised Eurozone Consumer Confidence figure for December could offer some support for the Euro, although pundits do not anticipate any change from the provisional reading’s discouraging contraction. Should the index surprise on the upside, however, the single currency may return to a stronger footing, despite European Central Bank (ECB) chief economist Peter Praet having also reiterated the dovish outlook of the central bank today.
Should oil prices fail to climb further away from the region of this fresh eleven-year low the ‘Loonie’ could begin to soften in response to commodity pressures. However, as Wednesday’s Canadian Retail Sales are expected to show an increase in consumer demand on the month in October, the EUR/CAD exchange rate could struggle to make substantial gains throughout the coming week.
Current EUR, CAD Exchange Rates
At time of writing, the Euro to Canadian Dollar (EUR/CAD) exchange rate was slumped in the region of 1.5107, while the Canadian Dollar to Euro (CAD/EUR) pairing was making gains around 0.6615.