Oil gains put pressure on euro and EUR/CAD

Higher crude oil prices underpin the Canadian Dollar, weighing on EUR/CAD.
Further gains in global oil prices remain limited by geopolitical developments and continuing US-Iran talks.
October’s Eurozone HICP figures are in focus as traders assess the European Central Bank’s monetary policy outlook.

At around 1.5620 during Tuesday’s European trading hours, EUR/CAD is retreating following the previous day’s advance. Higher crude oil prices are providing firm support for the Canadian Dollar (CAD), leaving the cross under pressure. Canada is the largest supplier of crude oil to the United States, making both its economy and its currency closely linked to global energy market performance.

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Geopolitical developments nevertheless continue to limit the scope for oil price gains. Iran’s confirmation that indirect talks with the United States remain under way to resolve their eight-month conflict could put further pressure on crude prices. The discussions follow several days of negotiations involving Iranian officials and Qatari mediators, which produced revised proposals but no breakthrough.

Due on Wednesday, October’s preliminary Eurozone Harmonised Index of Consumer Prices (HICP) figures are awaited by traders. The release 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, which strips out volatile items including food, energy, alcohol and tobacco, is expected to remain unchanged at 2.5% year-on-year.

Euro retains risk premium as French bond spreads remain elevated

According to ING analysts, French government bond spreads “didn’t benefit from lower oil prices yesterday,” an indication that “levels above 150bp are the new normal now.” In this environment, they contend, “it therefore remains hard for the Euro to shake out the lingering risk premium,” adding that “much more tangible progress” on energy is still needed “for oil to trade sustainably lower from here.”

Euro Records Its Weakest Performance Against the Canadian Dollar Today

Today’s percentage movements in the Euro (EUR) against the major currencies listed are set out below. Its weakest performance was against the Canadian Dollar.

	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. For instance, choosing the Euro on the left and following that row across to the US Dollar gives the percentage change for EUR (base)/USD (quote) in the corresponding cell.