European trading session on Tuesday, the EUR/CAD currency pair pushed modestly higher. This latest move reflects an important change in market conditions. Now spot EUR/CAD prices are hovering between 1.6345-1.6350 area. The cross has rallied significantly since then. On the flip side, it is still caught inside the trading range established yesterday and missing any real follow-through continuation momentum.
Market analysts attribute a mix of factors as the source of the modest gains in the EUR/CAD. The recently negative turn in crude oil prices is having a hostile impact on the loonie (CAD). As a whole, the CAD is a commodity-linked currency and is thus sensitive to oil price fluctuations. At the same time, oil prices have plummeted, which has conversely weakened the CAD against the euro. This has led to some underlying support for the EUR/CAD cross.
On Tuesday, spot price of the EUR/CAD were flat on the day. Our new heat map shows these percentage changes for each of the major currencies relative to each other. We view it as a mixed report card for the CAD. The CAD rose by 0.10% on the day against the US dollar (USD). It experienced a small increase of 0.03% with respect to the euro (EUR). In contrast, the British pound (GBP) traded flat at 0.00% vs the CAD, showing that there was no real movement.
Besides the CAD’s exceptional performance against other major currencies, other major currencies showed mixed results. The Australian dollar (AUD) was the strongest currency against the Canadian dollar (CAD), gaining 0.03%. At the same time, the kiwi (NZD) was the other beneficiary of a bigger appreciation of 0.18%. The safe-haven Swiss franc (CHF) traded with similar moves, up 0.01% against the CAD. Importantly, the CAD continued to show strength with a 0.12% appreciation against both the Japanese yen (JPY) and the CHF.
Traders are understandably on edge in light of these developments. Their eyes are very much on the next Canadian Consumer Price Index (CPI), which could weigh heavily on market sentiment if it prints hot. The CPI data is expected to shed light on inflation trends in Canada and may impact investor perceptions regarding future monetary policy decisions by the Bank of Canada.