EUR/CAD under pressure as rising oil weighs on euro

EUR/CAD comes under pressure as higher crude oil prices bolster the Canadian Dollar.
Further upside in global oil prices remains limited by geopolitical developments and continuing US-Iran negotiations.
October Eurozone HICP figures are in focus as traders assess the European Central Bank’s policy outlook.

EUR/CAD trades near 1.5620 in Tuesday’s European session. The cross has turned lower after the previous day’s advance, with higher crude oil prices providing strong support for the Canadian Dollar (CAD). Canada is the largest crude oil supplier to the United States, leaving both its economy and currency closely linked to global energy market performance.

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Geopolitical developments nevertheless continue to limit oil’s upside. Further pressure on crude prices could come from ongoing indirect talks between Iran and the United States, which Iran confirmed are aimed at ending their eight-month conflict. Several days of negotiations between Iranian officials and Qatari mediators preceded these discussions. They produced revised proposals but no breakthrough.

Wednesday brings the preliminary October Harmonised Index of Consumer Prices (HICP) figures for the Eurozone. Traders are awaiting the release, which is expected to play a significant role in shaping expectations for the European Central Bank’s (ECB) forthcoming monetary policy decisions.

Headline HICP inflation is forecast to edge up to 3.9% year-on-year from September’s 3.8%. By contrast, the core measure is expected to remain at 2.5% year-on-year. Core HICP excludes volatile items including food, energy, alcohol and tobacco.

Elevated French spreads keep Euro risk premium in place

French government bond spreads “didn’t benefit from lower oil prices yesterday,” ING analysts note, suggesting that “levels above 150bp are the new normal now.” In this environment, they argue, “it therefore remains hard for the Euro to shake out the lingering risk premium,” while the energy outlook still needs “much more tangible progress” “for oil to trade sustainably lower from here.”

Euro Performance Today

Against the Canadian Dollar, the Euro recorded its weakest performance today. The table below sets out today’s percentage changes in the Euro (EUR) against the major currencies listed.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.04%	-0.04%	0.11%	-0.19%	0.38%	0.04%	-0.08%
EUR	-0.04%		-0.08%	0.05%	-0.22%	0.35%	-0.02%	-0.13%
GBP	0.04%	0.08%		0.13%	-0.15%	0.41%	0.05%	-0.05%
JPY	-0.11%	-0.05%	-0.13%		-0.30%	0.27%	-0.09%	-0.19%
CAD	0.19%	0.22%	0.15%	0.30%		0.57%	0.20%	0.10%
AUD	-0.38%	-0.35%	-0.41%	-0.27%	-0.57%		-0.35%	-0.46%
NZD	-0.04%	0.02%	-0.05%	0.09%	-0.20%	0.35%		-0.10%
CHF	0.08%	0.13%	0.05%	0.19%	-0.10%	0.46%	0.10%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. To read EUR (base)/USD (quote), for instance, start with the Euro on the left and follow that row across to the US Dollar column. The intersecting cell gives the percentage change for that pair.