European Central Bank policymaker comments reinforce expectations of further tightening, supporting the Euro against the Canadian Dollar.
EUR/CAD stabilized around 1.6150 in European trading Friday after paring earlier losses. The cross found support as ECB official Isabel Schnabel reiterated that monetary tightening is not yet complete, citing persistent inflation risks despite short-term economic resilience.
Schnabel’s remarks contrasted with ECB President Christine Lagarde’s earlier stance, which suggested avoiding aggressive policy responses to geopolitical spillovers. Markets had priced in a pause in ECB hikes, but Schnabel’s comments revived bets on further tightening to meet the 2% inflation target.
The Canadian Dollar’s upside may be limited as the Bank of Canada is expected to hold rates steady through year-end. BoC minutes highlighted concerns over US trade restrictions and volatile energy prices, reinforcing a cautious policy outlook.