Forex Market: EUR/CAD touches fresh four-year highs on BoC interest rates view

The euro advanced to the strongest level in more than four years against the loonie, as the Canadian dollar is best known, amid speculation the Bank of Canada may cut interest rates to spur economic growth.

EUR/CAD touched a session high at 1.5587 at 11:30 GMT, after which it consolidated at 1.5562, adding 0.3% for the day. Support was likely to be received at March 18th low, 1.5332, while resistance was to be encountered at December 14th 2009 high, 1.5601.

Loonies demand was pressured after central banks Governor Stephen Poloz said yesterday that BoC may cut interest rates should the economy falter. In his speech before the Halifax Chamber of Commerce, Poloz blamed inclement weather for the weaker-than-expected economic growth, warning that GDP in the first quarter may be “on the soft side”.

Canadian wholesale sales increased in January as higher proceedings from computer and communications equipment offset declines in motor vehicles and parts, Statistics Canada reported today. Wholesale sales rose 0.8% to 50.0 billion Canadian dollars in January, short of analysts expectations of a 1% increase and after a 1.3% slump in the previous month.

Yesterday, data showed the value of securities transactions between Canadian residents and foreign investors unexpectedly declined in January. The corresponding figure reached 1.09 billion CAD in January, while preliminary estimates pointed to a figure of 3.24 billion CAD.

Meanwhile, in the 18-nation common currency bloc, the labor cost index was reported today to have increased 1.4% during the final quarter of 2013, compared to the same period a year ago.

In addition, output in region’s construction sector expanded 8.8% in January 2014 compared to January 2013. In monthly terms, output rose 1.5% during the first month of the year.

Elsewhere, EUR/CHF reached a session high at 1.2183 at 9:55 GMT, also the pair’s highest point since March 11th, after which consolidation followed at 1.2170, gaining 0.03% for the day. Support was likely to be received at March 18th low, 1.2150, while resistance was to be encountered at March 11th high, 1.2192.