Introduction to EUR/CAD Currency Cross
The EUR/CAD currency cross has been experiencing modest movements, trading around 1.6260 during the Asian hours on Tuesday. This comes after the pair registered some gains in the previous session. The Euro (EUR) is gaining support due to expectations that the European Central Bank (ECB) has finished cutting interest rates. Markets anticipate that the ECB will hold its deposit rate this year and see no change by the end of next year.
ECB’s Stance on Interest Rates
ECB Governor and Deutsche Bundesbank President Joachim Nagel recently spoke at the Frankfurter Impulse event in Frankfurt. He mentioned that although food inflation remains stubborn, the current level of the Euro at $1.16 is not a cause for concern. Nagel noted that the central bank is also monitoring the strong rise in service prices. He added that December projections will offer clearer insight into whether the current monetary policy stance remains appropriate.
Impact of Oil Prices on CAD
The commodity-linked Canadian Dollar (CAD) is receiving downward pressure from the lower Oil prices. West Texas Intermediate (WTI) Oil price is trading around $58.70. Crude Oil prices are losing ground as the United States (US) pushes for a peace plan between Ukraine and Russia to end the three-year war. The American Petroleum Institute (API) weekly crude Oil stock report will be closely watched later on Tuesday.
Economic Data from Canada
Statistics Canada reported that Retail Sales fell 0.7% in September, in line with market expectations and reversing August’s 1% increase. Traders are now waiting for Canadian Gross Domestic Product (GDP) growth figures, which are due this week. The release of the final German Q3 GDP will also provide some impetus for the EUR/CAD cross.
Conclusion
In conclusion, the EUR/CAD currency cross may regain its ground as the Euro gains support from expectations that the ECB has finished cutting interest rates. The downward pressure on the Canadian Dollar due to lower Oil prices may also contribute to the pair’s potential gains. As traders await key economic data from Canada and the release of the final German Q3 GDP, the EUR/CAD cross is likely to experience some volatility in the coming days.
