EUR/CAD - Long Set Up As ECB Signals Rate Hikes Are Coming
The EURO is likely to strengthen against the Canadian Dollar as the European Central Bank signals interest rates are going up in July and September, to move the overnight cash rate from -0.50% to 0.00%.
The reason the EURO will strengthen is down to the fact that interest rate differentials will narrow from the market's previous expectation, so investors who are short EUR/CAD will likely look to cash in on the carry trade as it's now hit its peak unless the Bank of Canada goes further then markets expect with rate hikes.
Oil prices are also a bullish beneficiary to the Canadian dollar, but Oil looks to have peaked since it hit $130.00 on March 8th 2022.
The reason the EURO will strengthen is down to the fact that interest rate differentials will narrow from the market's previous expectation, so investors who are short EUR/CAD will likely look to cash in on the carry trade as it's now hit its peak unless the Bank of Canada goes further then markets expect with rate hikes.
Oil prices are also a bullish beneficiary to the Canadian dollar, but Oil looks to have peaked since it hit $130.00 on March 8th 2022.
Kayan Kalipha