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Euro to Canadian Dollar (EUR/CAD) Exchange Rate Slides Sharply As Oil Prices Rise, Bank of Canada Policy Meeting Ahead

The Euro to Canadian Dollar (EUR/CAD) exchange rate weakened on Wednesday to trade in the region of 1.3250

The Euro to Canadian Dollar (EUR/CAD) Exchange Rate Fell To a Session Low of 1.3104

Rising oil prices buoyed the Canadian Dollar and looks set to continue to do so as investors raise their bets that prices will rise over the coming weeks and months.

Brent crude oil prices increased by a Dollar on signs that US oil production are beginning to slow.

According to the Energy Information Administration reported that US shale production would fall by 45,000 barrels per day to 4.89 million barrels per day in May.

The drop would be the first monthly decline recorded in four years. Adding to signs that production is slowing were supported by a report which showed that North Dakota’s oil production fell by 15,000 barrels per day in February.

Canadian Dollar Forecast to Make More Gains against Euro

The Bank of Canada is expected to keep interest rates on hold today and economists are forecasting that the bank’s policy makers will suggest that the rate cut made in January served its purpose by limiting the downside effects on the overall economy. With oil prices rising, the meeting is expected to be Canadian Dollar supportive.

‘Today, the Bank of Canada will hold its regular meeting and release its quarterly Monetary Policy Report. We like the majority of the market do not expect any additional monetary easing today. While the data from Canada has certainly highlighted the negative hit to the economy from the drop in crude oil prices, the flow of data hasn’t been as bad as many had feared and we suspect that’s a message we may get today from the BOC.  Downside risks certainly prevail though and the BOC will also emphasise that in order to give them the flexibility of moving again, say if crude oil prices were to fall back again. The projections on the last MPR assumed a crude oil price of USD 60 – we see no reason for that to change today,’ said an economist from Bank of Tokyo-Mitsubishi UFJ.

The Euro could regain ground later in the session if the European Central Bank (ECB) delivers a positive press conference. The ECB will also announce its interest rate decision. Policy makers are expected to leave rates unchanged.