Euro to Canadian Dollar Exchange Rate Slips as Investors Take Profit Following Macron Win

The Euro to Canadian Dollar exchange rate slipped from its highs last week and continued to drop on Monday. This was despite general optimism in the Eurozone following the election of pro-EU Emmanuel Macron as the next President of France.

EUR/CAD advanced from 1.4879 to 1.5014 last week but was unable to hold Friday’s high of 1.5148. This was also the pair’s best level since February 2016, making profit-taking particularly appealing for EUR/CAD investors.

Euro (EUR) Slips in Profit-Taking after Macron’s Election Win

Demand for the Euro peaked towards the end of last week as investors poured in on bets that pro-EU Emmanuel Macron would win the French Presidential election, leading to a year of increased stability in the Eurozone.

However, when Macron actually did win the French Presidential election on Sunday, the Euro was sold from its highs. Macron won the final round of the election with a mandate of over 66% against his anti-EU opponent Marine Le Pen.

Following Macron’s win of the first round of the election in April and his strong performance in a televised debate last week, markets had more or less priced in a Macron victory for the final round.

As a result, investors weren’t in a hurry to buy up the shared currency on Monday. Instead, traders took profit from the shared currency’s recent highs.

Concerns that Macron might have a tough premiership if his new party, ‘En Marche!’, did not perform well in the upcoming legislative elections also weighed on Euro demand.

Canadian Dollar (CAD) Gains Limited on Oil Concerns

The Canadian Dollar advanced slightly against the Euro on Monday, but this was largely due to the Euro’s profit-taking losses as the ‘Loonie’ also saw poor performance.

The main reason for the Canadian Dollar’s weakness this week so far has been lasting concerns about the global oil market. Oil is Canada’s most lucrative commodity.

While speculation is rising that OPEC will extend its oil production cuts past the end of 2017, prices of the commodity have recently fallen to their lowest levels since before the production cut was announced.

Persistently deep US oil stocks as well as continuously rising US oil production in recent months have kept prices of the commodity pressured and could continue to do so for some time.

Last week’s Canadian employment data failed to give the Canadian Dollar a significant boost as the drop in unemployment was largely caused by a drop in the participation rate.

EUR/CAD Forecast: Could ECB Tightening Bets Increase?

This week’s economic calendars for the Eurozone and Canada are likely to be a bit quieter compared to last week’s volatile trade and jittery market conditions.

Market confidence towards the Eurozone is likely to cool down now, with most political concerns having faded. Some investors may even entertain the possibility that the European Central Bank (ECB) could begin to hint at taking a more hawkish tone in the foreseeable future.

Thursday will see the publication of the ECB’s latest economic bulletin. While this may not mention the effects of the French Presidential election, ECB officials Constâncio and Praet will be making speeches throughout the day that may also hint at if the ECB’s tone has changed in recent weeks.

Any hawkish outlook from them on Eurozone inflation or lower risks could bolster the Euro towards the end of the week. Germany’s preliminary Q1 growth figures due on Friday could also influence the Euro.

As for the Canadian Dollar, new developments in the oil market could alter ‘Loonie’ appeal. This week’s Canadian data includes new house prices results from March, which will be published on Thursday.