Jamie Chisholm

Financial Times Middle East - - Markets & Investing -

Re­cent euro strength — as the con­ti­nent’s po­lit­i­cal con­cerns have waned — and softer oil prices weigh­ing on com­mod­ity cur­ren­cies such as the Cana­dian dol­lar have helped push the EUR/CAD ex­change rate higher of late.

RBC Cap­i­tal Mar­kets, in its Trade of the Week note, reck­ons the euro’s run has fur­ther to go as fis­cal and mon­e­tary fac­tors of­fer the loonie, as the Cana­dian unit is known, lit­tle sup­port.

“This week’s Fed­eral Bud­get in Canada is not likely to make any largescale changes to the deficit pro­jec­tion from the Fall Eco­nomic State­ment, while CPI data on Fri­day should show un­der­ly­ing in­fla­tion­ary pres­sures re­main muted,” says the bank.

For the euro, RBC reck­ons the bloc’s com­pos­ite pur­chas­ing man­agers’ sur­vey re­leased on Fri­day should hold at its mul­ti­year highs.

Fur­ther­more: “In the eu­ro­zone we have hawk­ish speak­ers (Wei­d­mann Mon­day, Laut­en­schläger Wed & Thu) who could broach the idea of a hike be­fore the end of quan­ti­ta­tive eas­ing, fol­low­ing com­ments from Nowotny last week.”

EUR/CAD re­sis­tance can be seen around the 1.44 level and the cross has strug­gled to break de­ci­sively above its 200-day moving av­er­age, around 1.4350 at mid-ses­sion yes­ter­day.

RBC said it es­tab­lished a long EUR/CAD po­si­tion at 1.4362 and has set a tar­get of 1.4665 for what is a trade de­signed to last just sev­eral days. A stop loss has been placed at 1.4230.

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