EUR/CAD touches one-week lows following Jens Weidmann comments, German confidence data

The euro dropped to a one-week low against the loonie, as the Canadian dollar is best known, after the governor of the Bundesbank and member of the ECB Governing Council, Jens Weidmann commented that central bank policy makers havent ruled out introducing further stimulus to spur economic growth in the euro area.

EUR/CAD touched a daily low at 1.5392 at 15:49 GMT, after which the pair consolidated at 1.5394, losing 0.62% for the day. Support was likely to be found at March 18th low, 1.5322, while resistance was to be met at March 24th high, 1.5543.

Weidmann said today the ECB bank may use negative interest rates to counter further appreciation of the 18-nation common currency and added that policy makers have not ruled out introducing new stimulus to fight against deflation. Stimulus programs tend to weaken a currency.

Euros demand was also pressured after data showed the business confidence in the largest euro zone economy, Germany, fell for the first time in five months,

The index of business climate in Germany dropped to 110.7 this month from 111.3 in February, the strongest since July 2011, the German research institute, Ifo reported today. Analysts predicted a smaller decline to 110.9. The index is based on a survey, encompassing almost 7 000 companies operating in manufacturing, construction, retail and wholesale trade.

The IFO gauge of business climate represents an average of the index of expectations and the index of current assessment. Both indexes are equally-weighted. Values above 100.0 are indicative of a greater number of positive forecasts. The more readings distance from this key level, the stronger the confidence of the entities surveyed is.

The IFO gauge of expectations, reflecting economic expectations of German companies during the upcoming six months, slowed down to 106.4 in March from 108.3 in the preceding month, missing analysts’ projections for a reading of 107.6.

However, the IFO gauge of current assessment for Germany, reflecting economic conditions at present, improved to a one-year high of 115.2 in March from 114.4 in February, exceeding expectations for an increase to 114.5.

Meanwhile, Statistics Canada reported last week that nation’s consumer price inflation advanced at the fastest pace in a year, rising 0.8% in February, exceeding analysts’ projections of a 0.6% increase and after consumer prices edged 0.3% higher in the previous month.

In addition, core consumer price inflation, which excludes the eight most volatile items, increased 0.7% last month, the most in a year, outstripping analysts’ expectations of a 0.5% gain and after a 0.2% advance in the preceding month.

Elsewhere, USD/RUB touched a one-month low at 35.591 at 09:55 GMT, after which the pair trimmed some losses to trade at 35.663 at 15:10 GMT, losing 1.2% on a daily basis. Support was likely to be received at February 25th low, 35.519, while resistance was to be encountered at March 24th high, 36.331.