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Euro Canadian Dollar (EUR/CAD) Exchange Rate Steady as Oil Prices Slide

May 20, 2021 - Written by John Cameron

EUR/CAD Exchange Rate Rangebound as Canadian Jobs Market Improves

The Euro Canadian Dollar (EUR/CAD) exchange rate held steady today as sliding oil prices have undermined demand for the commodity-linked ‘Loonie’. The pairing is currently fluctuating around CA$1.47.

The Canadian Dollar (CAD) struggled today as sinking oil prices and souring global risk sentiment has limited the appeal of the risk-sensitive currency.

Analysts at Reuters explain:

‘Oil prices dropped over $2 a barrel on Wednesday to their lowest in three weeks, on worries that surging COVID-19 cases in Asia would dent demand for crude and that U.S. inflation fears could prompt the Federal Reserve to slow economic growth with interest rate hikes.’

In Canadian economic news, today saw the release of the new housing price index for April, which beat forecasts and rose by 1.9% month-on-month.

Today also saw the release of the latest Canadian ADP employment change report for April which rose to 351 thousand.

Nela Richardson, chief economist at ADP, commented on the data:

‘Nearly every sector added jobs, with only information contracting slightly. Leisure and hospitality and trade, transportation and utilities led job growth along with other service-producing industries, while the goods-producing industries remained flat.’

Euro (EUR) Exchange Rate Steady as Eurozone Construction Output Rises

The Euro (EUR) held steady against the Canadian Dollar (CAD) today following the publication of the Eurozone’s construction output figure for March.

The latest construction output data revealed that the Eurozone’s economy is steadily improving. The figure rose by 2.7%.

The Vice-President of the European Central Bank (ECB), Luis de Guindos, expressed confidence in the Eurozone economy, saying that there was now ‘light at the end of the tunnel’.

Guindos said that Europe’s Covid-19 vaccination programmes are ‘offering a route out of the pandemic’, improving the overall confidence in the outlook for the Eurozone’s’ economy.

EUR investors will be awaiting today’s speech from the European Central Bank’s (ECB) President Christine Lagarde.

If Lagarde is notably upbeat about the outlook for the Eurozone economy, then the EUR/CAD exchange rate would head higher.

EUR/CAD Exchange Rate Forecast: Could Falling Oil Prices Drag Down the ‘Loonie’?

Canadian Dollar (CAD) traders will be looking ahead to tomorrow’s release of the Canadian retail sales data for March.

Any signs of improvement in the outlook for the Canadian economy would be CAD-positive.

Oil prices will continue to determine the direction of the CAD/EUR exchange rate this week, however. If oil prices head higher, then so could the oil-sensitive ‘Loonie’.

Euro (EUR) investors will monitor tomorrow’s release of the latest Eurozone PMI data for May. If the outlook for the Eurozone economy improves, then the EUR/CAD exchange rate would head higher.

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