Euro (EUR) Bolstered on German Retail Sales Growth as Canadian Dollar (CAD) Awaits Movement on Today’s GDP Figure
This afternoon’s GDP report for Canada looks set to shift the Euro to Canadian Dollar (EUR/CAD) exchange rate as pundits await confirmation of further economic contraction. A strong showing for German Retail Sales helped further boost the pairing this morning to peak at 1.4271, with the common currency apparently poised to take advantage of any further softening of the ‘Loonie’.
The still-softening ‘Loonie’ (CAD) has been able to consolidate gains as rumbles from Greece and poor German unemployment data caused another downturn for the Euro (EUR).
Commodity Currency Rally Bolstered Canadian Dollar as More Greek Trouble Prompted EUR/CAD Exchange Rate Fall
Recent weeks have not been kind to commodity currencies and the Canadian Dollar (CAD) has been no exception. With the global market seeing a serious downturn in the wake of China’s weaker than expected PMI figure on Friday the ‘Loonie’ saw a significant dip in value against its competitors. Monday saw a surge in the EUR/CAD exchange rate pairing as Chinese stock markets hit levels last equalled in 2007, peaking at 1.4485. Beijing’s pledge of intervention to ensure increased stability of stock prices, however, encouraged a resurgence for risk-sensitive currencies that pushed the rate back down.
Once again the situation in Greece did not do much to help the Euro (EUR) capitalise on the softening of rivals. The positive outcome of German IFO assessments in the beginning of the week were swiftly eclipsed by various stories coming out of the Hellenic nation. Former finance minister Yanis Varoufakis raised concerns with the revelation of the creation of a parallel banking system that had been intended to convert the economy back to the Drachma and create rapid Euro liquidation in the event of a Grexit. Naturally this put something of a dampener on sentiment towards the common currency, which was only compounded as Prime Minister Alexis Tsipras began threatening to call elections if party members continue to rebel against the enforcement of austerity measures.
Inflation Shortfall for Germany Caused Fluctuations for Euro Exchange Rate (EUR/CAD) Today
Today’s German unemployment data did nothing to shore up the Euro as it revealed an unexpected increase of 9,000 rather than the forecast decrease of 5,000. Indicating that the economy of the Eurozone’s most influential member state is not as solid as might be hoped this was the figure’s largest increase of the year so far. Equally spelling badly for the health of the German economy was the nation’s Consumer Price Index which showed an inflation downturn, coming in below target at 0.2% and moving further away from the European Central Bank (ECB) optimal rate of 2%.
As the initial boost from China’s stock intervention has worn off through the week, the Canadian Dollar has softened once again after its all-too-brief rally. Crude oil prices remain in a slump as the current glut in production shows no signs of dissipating particularly soon, in spite of industry closures.
Euro to Canadian Dollar (EUR/CAD) Exchange Rate Forecast: Canadian GDP Report Key to Watch, Boost for Euro Possible
Movement in the EUR/CAD pairing is inevitable with tomorrow’s GDP report from Canada. Expectations suggest that the economy will have experienced further contractions, heading firmly towards a state of recession should the trend continue uninterrupted. While extremely unlikely, should the figures demonstrate the opposite a strong rally for the ‘Loonie’ would be on the cards. Confirmed signs of an impending recession, however, will inevitably see the EUR/CAD exchange rate, among others, boosted significantly.
Should the morning’s Eurozone Consumer Price Index duplicate the disappointment of the German figures the Euro is likely to weaken, however a positive showing could well provide another good rally for the common currency.
Current EUR, CAD Exchange Rates
At time of writing EUR/CAD is trending in the range of 0.6999, while CAD/EUR is in the region of 0.7021.