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Euro to Canadian Dollar (EUR/CAD) Exchange Rate Forecast to Reach 1-Week High as Eurozone Data Supports

The Euro to Canadian Dollar (EUR/CAD) exchange rate rallied on Tuesday and was heading towards its best level in a week as economic data out of the 19-member Eurozone came in positively.

The Euro to Canadian Dollar (EUR/CAD) exchange rate touched a session high of 1.3567

The Euro advanced to a weekly high against the Pound Sterling and made gains against the US Dollar as data showed that inflation in the currency bloc is slowly beginning to return to positive territory.

Inflation on a monthly basis increased by 0.6% in February, up from the previous figure of -1.6%. On an annual basis prices across the region eased by -0.3%, in line with a preliminary estimated. The report also showed that prices in Greece tumbled by -1.9% on an annual basis as deflation in the nation continues to worsen.

Core inflation, which removes volatile goods such as food and fuel, took economists by surprise as it rose to a reading of 0.7%, beating economist expectations for the number to remain unchanged at 0.6%.

Also supporting the Euro was a report, which showed that the region’s jobs crisis eased slightly last year. According to Eurostat, employment across the Eurozone rose by 0.9% on an annual basis and by 0.1% in the final quarter of 2014. For the wider European Union, employment improved by 0.2% and by 1% respectively. Eurostat estimates that around 226.7 million adults were employed in the EU with 148 million of those in the Eurozone. Overall Eurozone unemployment is at 11.4%, its lowest level since August 2012.

Another report also bolstered the Euro as it showed that economic sentiment in Germany and the wider Eurozone improved to the highest level in 13 months.

The ZEW Centre for Economic Research said that its index of German economic sentiment rose by 1.8 points to 54.8 this month from February’s reading of 53.0. Analysts had expected the index to improve by 5.2 points to 58.2 in March. The index for the Eurozone increased from February’s figure of 52.7 to 62.4 in March, beating forecasts for a figure of 58.2.

Oil Prices Weigh on Canadian Dollar

The Canadian Dollar was under pressure against a number of major peers as oil prices fell to a new six-year low of below $44 per barrel. A supply glut in the USA was the main factor in sending the commodity’s value lower.

Further losses are likely for the ‘Loonie’ on Tuesday as economists forecast upcoming Canadian manufacturing data will come in poorly.