Forecasts for CAD to EUR
The Canadian Dollar's (CAD) trajectory against the Euro (EUR) has been informed by a variety of forecasts and broader market conditions. According to CIBC Capital Markets, there are expectations of the US dollar's strength against the Canadian dollar in 2024, with a revised year-end USD/CAD forecast of 1.31, which could imply a more challenging environment for CAD relative to EUR if the USD strengthens broadly. However, CIBC has expressed optimism for the Canadian Dollar in the subsequent year, anticipating potential USD softness which may work in the CAD's favor. On the other hand, Scotiabank analysts contend that the CAD, while not meeting its Q3 2023 forecasts against the USD, seems undervalued based on core economic factors and suggest that a Bank of Canada rate increase, presently underestimated by the market, could see an adjustment in the CAD value, possibly hinting at future strength against the Euro.
The Euro has its own set of forecasts that will inevitably affect the CAD to EUR exchange rate. Analyst projections show a cautiously optimistic view on the EUR with JP Morgan and ING envisaging a climb to 1.10 and 1.15 against the USD, respectively. A critical factor for the EUR's strength will be the difference in monetary policy adjustments by the Federal Reserve and the European Central Bank. The ECB's measures, in response to economic indicators and rate plans that previously pushed the euro below parity with USD, will be significant for the EUR's valuation. The eurozone's economic performance, informed by lagging consumer confidence as indicated by HSBC, could presage a weaker Euro, potentially benefitting the CAD/EUR exchange rate.
Regarding recent price movements, CAD to EUR has hit 14-day highs near 0.6802, flirting with its 3-month average, although moving within a relatively stable range. As Canada is a major oil exporter, CAD's value is also tied to fluctuations in oil prices. With OIL to USD currently at 82.83, lower than its 3-month average of 87.48, and experiencing considerable volatility, this could introduce additional pressures on the CAD. However, the currency market will continue to monitor these prices keenly, as any significant rebound in oil markets might provide the Canadian Dollar with relative support against the Euro.
