EUR/CAD: Loonie vulnerable to further weakness as price of oil collapses – MUFG

Analysts at MUFG Bank, see the EUR/CAD pair rising further in the short-term. They have a target for the pair at 1.5800. 

Key Quotes:

“We are recommending a long EUR/CAD trade idea to reflect building downside risks for CAD. The price of oil has come renewed selling pressure following reports that OPEC+ talks are on the verge of collapse. Russia does not agree with the OPEC proposal for deeper cuts. It reinforces downside risks for the price of oil from demand disruption related to the coronavirus shock.”

“The BoC followed the Fed and delivered a 0.50 point rate cut and left the door wide open for further easing. The BoC has more room to cut rates than other G10 central banks posing downside risks for the CAD. On the other hand, the EUR is expected to benefit further from the liquidation of funding positions amidst elevated coronavirus fears. There is also upside risk for the EUR if the ECB fails to meet expectations for easing in the week ahead. Unlike the Fed and BoC, the ECB has less room for manoeuver.”