Severus SPA (Italy). has to pay 5 million Canadian dollars for supplies it recently received from Canada. Today, the Canadian dollar has appreciated by 2 percent against the euro. Severus has determined that whenever the Canadian dollar appreciates against the euro by more than 1 percent, it experiences a reversal of 40 percent of that movement on the following day. Based on this information, the Canadian dollar is expected to ____ tomorrow, and Severus would prefer to make payment ____.

Question

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The Canadian dollar is expected to depreciate by 0.8% tomorrow because it has appreciated by 2% today and Severus experiences a reversal of 40% of that movement on the following day. Therefore, Severus would prefer to make payment tomorrow when the Canadian dollar is expected to be worth less against the euro.