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The euro has fallen against the Canadian dollar for the third consecutive trading day, hovering around 1.5920 during Wednesday’s European session. Despite Germany’s stronger-than-expected industrial performance, the euro remains under pressure, causing the EUR/CAD pair to continue its decline. Official data show that German industrial output surged by 2% month-on-month in September, far exceeding the market’s forecast of 0.5% and reversing August’s 1.2% decline. Year-on-year, industrial output rose by 2.3%, compared to a previous decrease of 1.6%. However, these strong economic figures were overshadowed by prevailing risk-averse sentiment, and the euro remained pressured. Escalating geopolitical tensions in the Middle East pushed Brent crude prices back above 100 dollars per barrel, sparking concerns over energy-driven inflation and a slowdown in eurozone economic growth. Rising oil prices provided solid support for the Canadian dollar, which is highly correlated with commodity prices, further weighing on the euro. As long as global energy supply risks continue to drive up oil prices, the strength of the Canadian dollar may continue to drag down the EUR/CAD exchange rate.

Spot gold dropped approximately $15 in the short term, hitting a low of $4,122 per ounce.

During Wednesday's European trading session, US stock index futures were subdued as a rebound in US Treasury yields weighed on investor sentiment, with markets awaiting the release of the latest Federal Open Market Committee meeting minutes by the Federal Reserve. The US bond market continued to face pressure, with the 10-year Treasury yield rising above 5.30%, and the 30-year yield hovering around 5.69%. Persistent inflation concerns, a widening fiscal deficit, and a significant increase in artificial intelligence-related bond issuance are key factors keeping yields elevated. Escalating geopolitical tensions in the Middle East are driving up crude oil prices, further intensifying inflationary pressures and sustaining expectations of interest rate hikes. However, recent weakness in US labor market data has lowered expectations for an aggressive tightening policy by the Federal Reserve. According to the CME FedWatch tool, traders currently estimate only about a 22% probability of a rate hike at the Fed's October meeting.

Due to the ongoing fiscal crisis in France and new political risks emerging in Europe, the euro dropped against the pound to its lowest level since June last year. The euro fell as much as 0.4% against the pound to 0.8449, breaking below this year's low set in July. Earlier this week, the euro had already fallen to a 17-month low against the US dollar, and on Wednesday, it also underperformed most G10 currencies. France is currently facing increasing pressure in its bond market. Missed fiscal deficit targets, gridlocked policies, and the possibility of significant policy shifts due to next year's presidential election are all undermining investor confidence. On Tuesday, far-right presidential candidate Marine Le Pen called on the European Central Bank to intervene in order to reduce the rapidly rising government financing costs. The turmoil in the French market has already spread to the European government bond market. Last week, European bonds experienced a large-scale sell-off, reviving memories of the eurozone debt crisis.