EUR/CAD holds ground at 1.5840 as markets price in a December ECB rate hike, while the Canadian Dollar weakens alongside a fourth day of declines in WTI crude oil prices to $85.20.
EUR/CAD trades around 1.5840, inching higher as final German HICP data for October confirmed the preliminary figures (2.8% year-on-year). Markets have pushed a December ECB hike close to fully priced, supporting the euro, while the oil-linked Canadian dollar struggles as WTI falls for a fourth straight day to around $85.20.
WTI continues to lose ground for a fourth successive day, trading around $85.20 per barrel. The decline is driven by signs of easing US-Iran tensions: President Trump suggested additional military strikes may no longer be necessary, and Congressional Democrats are pushing to use the government funding deadline to end the conflict, fuelling optimism for a diplomatic settlement that would ease supply fears.
Deutsche Bank reports a major selloff in European sovereign bonds, with Bund, OAT and BTP yields rising sharply as markets move a December ECB hike close to fully priced and add tightening out to June 2027. Higher ECB rate expectations push Bund yields up, though the article notes the selloff was not as big as in the US.
October German HICP confirmed at 2.8% year-on-year, and Deutsche Bank notes markets now price a December ECB hike as close to fully priced, with extra tightening out to June 2027. Higher rate expectations support the euro, though a sovereign bond selloff in Europe and a stronger US dollar partly offset this.
The commodity-linked Canadian dollar struggles as WTI crude loses ground for a fourth successive day to around $85.20 per barrel. Falling oil revenue prospects weigh on CAD, with the euro up 0.03% against it today, though easing US-Iran tensions could later stabilise crude and support the currency.
The EUR/CAD cross trades near 1.5840 as the Euro gains support from hawkish ECB rate expectations following confirmed German inflation data. Conversely, the Canadian Dollar remains under pressure as WTI crude oil prices fall for a fourth consecutive day to $85.20 per barrel amid easing US-Iran geopolitical tensions.
Traders expect the ECB to raise rates in December after German inflation confirmed at 2.8% in October, while the Canadian dollar is weakened by falling oil prices.
If oil prices stop falling on easing US-Iran tensions, the Canadian dollar would recover, and the euro's gains depend on those ECB hike expectations holding.
Markets see a lower risk of supply disruption because US-Iran tensions are easing, with President Trump suggesting further military strikes may no longer be necessary.
Bund yields rose sharply as investors repriced ECB policy, with a December rate hike now seen as close to fully priced.
Expectations that the ECB will hike rates in December have become almost fully priced following confirmed German inflation of 2.8% in October.
Canada's currency is tied to oil prices, and WTI crude has been falling for four straight days, now around $85.20 per barrel, as US-Iran tensions ease.