Forex: EUR/CAD erases yesterday’s gains, at 1.3258

FXstreet.com (Barcelona) - As investors trade ahead of the ECB interest rate decision and Canada trade balance data, the EUR/CAD has erased yesterday’s gains by moving back to 1.3258 after kissing the opening price at 1.3290 from below several times.

Market focus for today is the ECB interest rate decision, and while TD Securities analysts expect a 25bps refi rate cut, and this seems to have been well telegraphed by Draghi suggesting it was data dependent at last month’s press conference, it is still not a slam dunk decision: “We remain very uncomfortable, given when all is said and done, it will likely mean little for the economy so the ECB is actively looking for other options, which makes handicapping market reactions difficult”, wrote analyst Alvin Pontoh, adding that if the rate cut can improve sentiment, or via reduced LTRO funding costs create incentives to buy peripheral debt, “then we could see a peripheral rally, but core rates risk moving higher if there is no suggestion of a deposit rate cut or more action to come”.

“Canada’s international trade deficit is expected to narrow slightly to -$0.8bn in March from -$1.0bn in February. The balance of risk to this forecast is towards a wider deficit. Nonetheless, exports are expected to post a modest rebound following a 0.6% drop in the month before. Auto exports are expected to reverse a substantial portion of the 5.6% gain in February, reflecting a significant decline in auto production and US orders”, wrote TD Securities analyst Marcin Budkiewicz, adding that energy exports should be higher on the month off the back of higher commodity prices, while decent lumber exports should be sustained owing to continued housing construction in the US.

Mataf.net analysts point to resistance at 1.3290, 1.3315 and 1.3350. On the downside, supports might be found at 1.3245 and 1.3205.