02 Jan TRADING EDUCATION: EUR CAD
The EUR CAD is known colloquially within forex trading as simply the “Euro-Loonie”.
Both halves of the EUR CAD are considered to be ‘major’ currencies, with the EUR the second-most traded money in the world behind the USD. Whilst, the CAD is the seventh most-traded currency in the world
Eurozone sovereign debt issue has weighed heavily on the Eurozone economy as a whole with a significant QE from the European Central Bank, coupled with stubbornly high levels of unemployment within the Eurozone’s major economies resulting in continuing weakening within the EUR.
The EUR is mostly influenced by economic factors such as economic data from Germany and the interest rate decisions of the European Central Bank. In addition to this, continued political uncertainty over closer political union, migration and the difference in bond yields between the US and Europe are vital.
The Canadian dollar is similarly affected by economic and political factors, but is also heavily influenced by the fluctuations of certain commodities, such as Crude Oil which accounts for 28% of its Gross exports. Commodity prices for both Timber and non-precious metals such as aluminium can also impact the CAD, although to a lesser effect than Crude Oil prices.
The EUR CAD is not the most widely traded pair, this is primarily due to the significant volatility that the pair can experience. However, experienced traders have found the EUR CAD a fantastic tool for diversification, especially for those traders who already trade Crude Oil. On the other hand, the currency pair is less preferable for new traders as they learn to trade due to its complexity and volatility.