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THE EURO/CANADIAN DOLLAR
One of the most important currency pairs over the last decade, the EUR/CAD has become a major focus of the markets due to the free trade agreement signed between Canada and the EU. Learn more about this trade agreement and everything else you need to start trading.
WHO SHOULD CONSIDER TRADING THE EURO/CANADIAN DOLLAR?
Day traders can find a lot of benefit from trading this currency pair. Short-term movements throughout the day allow traders to quickly enter and exit a trade in a matter of minutes.
Anyone who wants to trade currencies online. The Euro/Canadian Dollar is considered a major currency pair, meaning that it enjoys large trading volume and easy to access financial information.
Traders who are interested in hedging their bets. This includes traders who are currently investing in other currencies, along with traders who are investing in other assets, including commodities, stocks and indices.
WHY DISCUSS THE EURO/CANADIAN DOLLAR?
Canada and Europe have shared history, shared heritage and a close relationship that has lasted for many years. But that relationship was taken to the next level on September 21, 2017 when the two sides signed CETA. (Comprehensive Economic and Trade Agreement.) This free trade agreement is predicted to greatly enrich both sides. Prior to the agreement,the value of goods and services traded between Canada and Europe totaled 64.3 billion Euros.
WHAT YOU NEED TO KNOW ABOUT THE EURO AND THE CANADIAN DOLLAR
The total value in GDP of both economies is 21.53 trillion dollars. Trade is predicted to increase in the future, as both Europe and Canada enjoy similarities in law, accounting, business practices and culture. In addition, somewhat souring relations between Canada and the United States could push the Canadians to find new markets and opportunities where they can sell their goods.
HOW HAVE THE TWO CURRENCIES FARED AGAINST EACH OTHER OVER THE LAST TEN YEARS?
Up until the middle of 2009, the Euro was consistently outperforming the Canadian Dollar, with the value hovering consistently around 1.7. But as with most currencies, the Euro lost ground, reaching a low of 1.2 on August 12, 2012. Since then, the Euro has made a slow recovery, averaging roughly 1.5 against the Canadian Dollar. Traders should closely monitor the UK exit from Europe, which could cause a sharp decline in the value of the Euro.
WHAT ARE THE FACTORS THAT MOVE THE EUR/CAD VALUE?
There are a multitude of factors that can alter the direction of this currency pair. But some of the major factors include in Europe: the ECB interest rates (European Central Bank), the unemployment rates and the consumer confidence flash. In Canada, some of the most important factors that could cause currency movement are balance of trade, unemployment rate and the Bank of Canada interest rate decision.
It is also recommended to track commodity prices. Canada is a big provider of natural resources to the rest of the world, including gold, timber, copper, lead and oil.
WHAT ARE THE POSITIVE REASONS FOR TRADING THE EURO/CANADIAN DOLLAR?
The CETA agreement between Europe and Canada could possibly usher in a new era of prosperity for both and could lead to unprecedented financial growth.
The Euro and the Canadian Dollar, like all other currency pairs, is extremely liquid. This guarantees that traders who spot an investment opportunity can take advantage of it.
There is an abundance of financial information available for both markets. Traders can easily keep abreast of the latest news and events.
WHAT YOU MAY WISH TO CONSIDER
Canada’s pipeline into the European Union is the United Kingdom. Both countries are intertwined due to a common history. They are also both members of the British Commonwealth. A UK exit from the European Union could alter the relationship between Europe and Canada.
Italy is currently under the microscope. A new far right party with politics that differ from the mainstream norm in the European Union, has taken control of the government after hotly contested elections. Italy is one of the larger member states in Europe and cannot be easily cajoled or seduced by the European Parliament.
HOW DO I TRADE THE EURO/CANADIAN DOLLAR?
The fastest way is to sign up with an online broker such as eToro. It will give you quick access to the Euro/Canadian Dollar and dozens of other financial assets which you can trade on your computer or cell phone.
The slowest way is to go to your bank or financial institution of choice, where you can open an account and engage in actual currency exchange, with higher commissions and service charges.
Invest in futures or options that allow you to speculate on the direction of the markets. Arguably a more complicated way to invest in currencies.
IS TRADING THE EURO/CANADIAN DOLLAR RIGHT FOR ME?
Only you can answer that question. But if you are committed, want to learn, understand the risks involved and are willing to put in the effort, then you are ready to enter a market with unlimited opportunities.
*This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.
*Past performance is not an indication of future results. All trading carries risk. Only risk capital you’re prepared to lose.