The EUR/CAD pair is the abbreviated term used for the Euro & Canadian dollar. This pair does not have a nickname. Before we get into the particulars, what exactly does the EUR/CAD rate mean? The exchange rate tells you how many Euros (the quote currency) are required to purchase one Canadian dollar. (base currency). For example, if the pair is trading at 1.46, it means it takes 1.46 Euros to buy 1 Canadian dollar.

Breaking Down ‘EUR/CAD’

The Euro (€; EUR) is the official currency of 19 of the 28 member states of the European Union. The Euro is the second-largest and second most traded currency in the foreign exchange market after the United States dollar. The Euro is divided into 100 cents.Whereas, the Canadian dollar is also classified as a commodity currency, as it exhibits a correlation to the energy product's crude oil and natural gas. Since the Euro is a first currency (base currency) and the Canadian dollar is a second currency (the quote currency), the pair is called a cross-currency pair.

What Determines the EUR/CAD Exchange Rate?

Several factors can impact the EUR/CAD rate valuation, including: The European Central Bank or ECB is the central bank for the European Union. It has a broad range of duties, similar to those of most central banks around the world. It acts as the government's bank and the lender of last resort. It issues currency and, most importantly, it manages monetary policy.The Bank of Canada or BOC was founded in 1934 under the Bank of Canada Act. The Act stated that the Bank of Canada was founded to promote the economic and financial welfare of Canada. The BOC and its Governor are liable for handling the monetary policies, printing money and managing the Canadian bank's interest rates.

Economic Events:

The movement in the Euro and Canadian dollar determine the exchange rates. Top of the line economic events includes GDP, Employment Change, Industrial Production, and Consumer Price Index. Better than forecast data increases the demand for related currency and impacts the value of either the Euro and the Canadian dollar causing fluctuations in the EUR/CAD exchange rate.

Major Economic Events:

Gross Domestic Product – The Gross Domestic Product is the central measure of economic growth in the region.Employment Change – Both currencies are sensitive to changes in employment, as slacks in the labor market cause a drop in Inflation rates.Consumer Price Index – Since one of the goals of ECB and BOC is to maintain price stability, they keep an eye on inflation indicators such as the CPI. If the annual CPI deviates from the central bank’s target, the central banks could make use of their monetary policy tools to keep inflation in check.The balance of Trade –The Eurozone and Canada have an extremely robust trade sector, so currency traders and bank officials alike tend to watch changes in the countries’ export and import levels.Political announcements & natural disasters – Besides the scheduled economic events, political elections, new systems, wars, terror incidents, natural calamities, etc. can all cause severe variations within EUR/CAD.

Currency Correlations

Correlation is merely a mutual relationship or connection between two or more things.Positive correlation – The positive relationship merely is when pairs move in tandem with each other.In the forex world, EUR/CAD - EUR/SGD, and EUR/CAD - USD/CHF currency pairs are positively correlated.Negative Correlation – In contrast, a negative relationship is when forex pairs move in the opposite direction. For example, EUR/CAD - CAD/CHF, EUR/CAD - USD/CHF, and EUR/CAD - XPT/USD.The Euro is one of the most important alternatives to the U.S. dollar among fiat currencies. This is why there is often a positive link between the Euro and gold: both assets are negatively correlated with the greenback. However, This is because gold is not merely an alternative against the U.S. dollar, but also against the current monetary system based on fiat currencies. Therefore, in some cases the Euro and the dollar both lose (or gain) ground against gold.

EUR/CAD Specifications

Standard lot Size: 100,000 Mini lot size: 10,000 Price minimum increment: 0.00001 Pip Value: $7.54