The Euro to Canadian Dollar (EUR/CAD) exchange rate advanced by around 0.21% on Wednesday afternoon.
With crude oil prices tanking towards $40 a barrel amid oversupply in the US, the commodity-correlated Canadian Dollar softened versus the majority of its most traded currency rivals. Aiding the downtrend was disappointing domestic data.
The Euro, meanwhile, advanced versus many of its major peers after the European Central Bank (ECB) stated that quantitative easing was having a positive effect already, and that the Eurozone economy is showing signs of gradual recovery.
The Euro to Canadian Dollar (EUR/CAD) exchange rate is currently trending in the region of 1.3576.
Euro (EUR) Exchange Rate Edges Higher after QE Launch
After ECB President Mario Draghi showed confidence in quantitative easing and stated that it is already having a positive effect, the shared currency has strengthened considerably. This appreciation, however, could be the Euro’s undoing given that QE is designed to devalue a currency not support it. With opinion divided as to whether the program will be beneficial, there is a possibility that the single currency will resume declination in the long-term.
European data printed reasonably positively on Wednesday which aided the common currency appreciation. On the year, Eurozone Construction Output advanced by 3.0% in January, well above the previous output, which declined by -2.7%. Monthly Construction Output improved by 1.9% in January, eclipsing December’s growth of just 0.2%.
The Euro to Canadian Dollar (EUR/CAD) exchange rate dropped to a low of 1.3528 today.
Canadian Dollar (CAD) Exchange Rate Slides on Crude Prices
As a currency particularly sensitive to movement in the oil market, the recent crude price declination weighed heavily on the ‘Loonie’ (CAD). The low prices have been attributed to oversupply in the US as they struggle to find enough storage capacity.
‘US inventories will probably continue to rise for the next few months, as refineries conduct seasonal maintenance and investors hold out for higher prices, according to Bloomberg Intelligence. In addition to traditional storage in tanks represented in today’s numbers, drillers have left thousands of nearly finished wells untapped in what’s become de facto storage, sometimes known as the fracklog,’ wrote Bloomberg’s Tom Randall.
Euro to Canadian Dollar (EUR/CAD) Exchange Rate Forecast to Fluctuate
Given that the Canadian Dollar tracks US Dollar movement, there is the potential for the Euro to US Dollar (EUR/CAD) exchange rate to fluctuate once the FOMC make their decision. There is also the potential for EUR/CAD fluctuations on Thursday as the ECB publishes its economic bulletin.
The Euro to Canadian Dollar (EUR/CAD) exchange rate climbed to a high of 1.3607 today.