The Euro to Canadian Dollar (EUR/CAD) exchange rate gave up earlier gains on Tuesday afternoon as the ‘Loonie’ found support from a rise in crude oil prices.
The Euro to Canadian Dollar (EUR/CAD) Exchange Rate Touched A Session High Of 1.3601 Earlier
Concerns over the conflict in Yemen and anticipation of a report due to be released by the American Petroleum Institute sent oil prices climbing by more than $0.40 to close to $60 per barrel.
The conflict in Yemen between Houthi rebels and a Saudi Arabian coalition raged on ahead of a planned truce. According to reports the Yemenese capital of Sanna was hit by several air strikes and Houthi forces have claimed to have shot down a Moroccan fighter jet. The conflict has intensified in recent days as Houthi rebels and Saudi forces exchanged artillery and rocket fire along the Yemen, Saudi border.
Ahead of a proposed ceasefire, the Saudi military moved large numbers of troops and armoured vehicles into the border town of Najran close to Yemen’s border. The action has raised concerns that a ground invasion could be launched over the coming weeks. The Houthis meanwhile have escalated their advance in the port city of Aden. The seas around Yemen’s south and west are vital trade lanes, which link the Far East to the Mediterranean, some observers, are worried that the fighting could disrupt shipping moving up the Gulf Aden and the Red Sea. To ensure that disruptions to trade do not occur, the US has built up its naval presence in the area.
Oil prices could rise further later if the latest reports by the American Petroleum Institute show that US oil inventories decreased. Oil prices declined sharply earlier in the year as data showed that the global markets were suffering from a supply glut.
A report released by the Organization of the Petroleum Exporting Countries (OPEC) earlier in the session suggests that oil prices will stay below the $100 per barrel mark for the next decade. The reports most optimistic assessment predicted that oil prices will reach an apex of $76 per barrel in 2025.
The Euro could regain lost ground and push higher on Wednesday if the latest GDP figures from the Eurozone suggest that the Eurozone economy is indeed strengthening. Also of importance will be German inflation rate and Eurozone industrial production data.