Forex: EUR/CAD tumbles on ECB Weidmann’s suggestion of rate cut

FXstreet.com (Barcelona) - The EUR/CAD is at a fall, not in reaction to the BoC monetary policy announcement but to Buba’s Weidmann interview to WSJ suggesting a ECB rate cut soon if economic data remains gloomy, where he also warns of its side-effects: “Medication monetary policy makers administer only cures the symptoms and that it comes with side-effects and risks”. Weidmann believes it might take a decade for Europe to recover. The EUR/CAD fell from just below 1.3500 to print a low at 1.3386. The market has bounced back above the 1.3400 and is trading at 1.3430.

Earlier, the BoC kept its rate unchanged at 1% at its April meeting. “On a quarterly basis, growth in Canada is expected to pick up to about 2.5 per cent in the second half of this year. Despite this expected pickup, with the weak growth in the second half of 2012, annual average growth is now projected to be 1.5 per cent in 2013. The economy is then projected to grow by 2.8 per cent in 2014 and 2.7 per cent in 2015, reaching full capacity in mid-2015 – later than anticipated in the January MPR”, said the statement. This was the last meeting headed by Governor Carney, as he will become the new BoE Governor.

Mataf.net analysts point to resistance at 1.3490, 1.3520 and 1.3575, while supports are at 1.3345, 1.3390 and 1.3450.