In the aftermath of a particularly dovish speech by European Central Bank President Mario Draghi, the Euro to US Dollar and Canadian Dollar (EUR/USD/CAD) exchange rates have declined significantly. Meanwhile, the US Dollar has generally softened against the majority of its most traded competitors due to trader profit locking. The Canadian Dollar, however, has advanced against nearly all of its major peers thanks to inflation data fuelling speculations of a benchmark rate increase.
The Euro to US Dollar exchange rate is currently trending in the region of 1.2412.
The Euro to Canadian Dollar exchange rate is currently trending in the region of 1.3935.
Euro (EUR) Dives on Draghi Speech
ECB President Mario Draghi gave a speech in Frankfurt on Friday, and the common currency has declined across the board as a result. Draghi intimated that the Eurozone economy was showing no signs of improvement, and ‘excessively low’ inflation had to be raised speedily by whatever means necessary.
‘We will continue to meet our responsibility – we will do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us,’ Draghi said in a speech at an annual banking congress.
US Dollar (USD) Softens on Profit Buying
After US inflation data allowed the ‘Buck’ (USD) to advance significantly on Thursday, the North American asset has softened on Friday. This is as a result of trader profit buying amid concerns that next week’s US Gross Domestic Product data will show cool growth.
Canadian Dollar (CAD) Advances on Inflation Data
The Canadian Dollar has appreciated against the majority of its most traded currency rivals as a result of better-than-expected Canadian data. The Consumer Price Index eclipsed the market consensus of a rise from 2.0% to 2.1%, with the actual result reaching 2.4%. Similarly, the Core CPI advanced beyond the median market forecast of 2.1%, with the actual result jumping to 2.3%.
Given that the Bank of Canada have set a 2.0% inflation target, the fact that the recent results have exceeded that target has fuelled speculations that the central bank will need to increase their benchmark rate to accommodate for inflationary pressure.
The Euro to US Dollar exchange rate has moved in a range of 1.2403 to 1.2568.
The Euro to Canadian Dollar exchange rate has moved in a range of 1.3912 and 1.4210.
