Euro advances against Canadian Dollar despite higher oil prices
EUR/CAD inches higher after registering over 0.5% losses in the previous day, trading around 1.6070 during the European hours on Monday. The currency cross gains some ground as the commodity-linked Canadian Dollar (CAD) struggles despite higher oil prices.
WTI price rose due to renewed Middle East tensions after Israel and Iran exchanged strikes. The Guardian reported that air raid sirens sounded in Tel Aviv, following the attack from Yemen. The retaliatory attacks from Yemen, whose military force, the Houthis, is backed by Iran, reflect that conflicts in the Middle East have started again.
Earlier, the BBC reported that the Israel Defense Forces (IDF) reportedly struck military targets in Iran following an Iranian missile salvo aimed at northern Israel. This escalation occurred despite US President Donald Trump's criticism of previous Israeli strikes in Beirut and his active push for a diplomatic resolution between Prime Minister Netanyahu and Tehran.
The downside of the Canadian Dollar (CAD) could be restrained due to stronger-than-expected domestic employment data. In May, Canada’s economy added 88,000 jobs, significantly exceeding economic forecasts. This robust labor market performance has reinforced expectations that the Bank of Canada (BoC) may keep interest rates elevated for a longer period than previously anticipated.
On the data front, the Eurozone’s Sentix Investor Confidence data, a key indicator of Investor morale, improves to -13.4 in June from -16.4 in May. Germany’s Factory Orders dropped by 3.8% in April after rising by a revised 4.5% in March. Data missed the estimated 1.2% decrease. On an annual basis, orders increased by 1.6% year-over-year (YoY) in April, as against the previous rise of 4.5% (revised from 5.0%).
Commerzbank’s Rainer Guntermann says a 25-basis-point hike by the European Central Bank (ECB) on Thursday is almost certain and fully priced, marking the first increase since September 2023. He expects no back-to-back move in July, viewing that as premature, but looks for another hike in September. Lower Oil prices should then ease inflation, preventing restrictive policy and opening scope for rate cuts in 2027.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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