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Will ECB Press Conference see Mario Draghi Boost Euro Canadian Dollar Exchange Rate?

The Euro has risen by 0.3% against the Canadian Dollar today and could be pushed further up in the future on European Central Bank (ECB) comments.

  • EUR CAD rate climbs to 1.42 – CAD EUR trades at 0.70
  • Euro advances on forecast-beating German production – French trade deficit widens
  • Canadian Dollar dips as oils prices keep falling – Productivity slows in Q4
  • High Euro volatility likely on incoming ECB rate decision – Canadian Dollar drop expected if jobs data disappoints

Eurozone economic data today has been relatively limited, with the main Euro movement coming from German industrial production figures for January.

Forecasts had initially been for a rise in production from -2.4% to 2.5%, which meant that the forecast-beating 2.8% figure provided an additional boost to the Euro’s value.

Offering a succinct response to the news was the German economy ministry;

‘Overall, industrial production got off to a good start into 2017’.

Other Eurozone news has been less supportive, with France recording a trade deficit expansion in January and Irish construction slowing in Q4 from 19.7% to 16.8%.

The background EU focus has been on the future integrity of the Eurozone, ahead of a meeting of EU leaders. While the heads of France, Germany, Spain and Italy have recently promoted a ‘multi-speed’ EU instead of ‘ever-closer union’, a senior EU official has stated that;

‘Multi-speed should not be seen as an objective, but it is a warning …a warning to all of us’.

With oil prices dropping to $52.36 per barrel today, the Canadian Dollar has been in low demand and a fall in Q4 labour productivity has further reduced the CAD’s value.

The Euro may rise further against the Canadian Dollar on Thursday afternoon, when the European Central Bank (ECB) interest rate decision is due.

The rate is expected to stay at 0%, making the following press conference from ECB President Mario Draghi the more impactful development.

Economists will be watching for any mention of inflation, which may be confirmed as having hit 2% in February next week. Draghi is not expected to reverse policy on freezing rates immediately, but even an acknowledgement that rising inflation must eventually addressed may be enough to raise Euro demand.

The next major Canadian data will be Thursday’s new house price index stats, although Friday’s jobs figures are expected to have a higher impact.

In the latter case, Canadian unemployment in February is forecast to remain at 6.8% while employment is expected to show 2.5k jobs gained, compared to a prior 48.3k.

This may fail to budge the Canadian Dollar, given how slight the employment change is predicted to be.

Current EUR CAD Interbank Exchange Rates

At the time of writing, the Euro Canadian Dollar (EUR CAD) exchange rate was trading at 1.41 and the Canadian Dollar Euro (CAD EUR) exchange rate was trading at 0.70 today.