During the European session the Euro dropped against several of its major peers and lost ground against the Canadian Dollar as less-than-impressive retail sales figures for the Eurozone left the common currency struggling.
The Euro was little affected by a mixed bag of services PMI figures, but the news that sales in the currency bloc plummeted by a whopping 1.6 per cent in December took a toll.
Although December is traditionally the month of generosity, with Christmas shopping dominating most people’s spare time, it appears that there was a severe lack of cheer in the Eurozone over the festive period.
After the figures were released a Citigroup economist stated; ‘A weakness in domestic demand doesn’t help the picture on prices. Even if we do see some modest growth in the economy, that doesn’t mean that inflation risks are immediately disappearing.’
Expectations that this result could be the final push the European Central Bank needs to introduce additional stimulus saw the Euro soften against peers like the Canadian Dollar and we forecast that the EUR/CAD pairing will fluctuate further after the ECB announcement is made.
If the central bank holds off on introducing additional stimulus the Euro will be buoyed against its rivals.
Meanwhile, the ‘Loonie’ was a little knocked during the local session as the value of domestic building permits unexpectedly declined, dropping 4.1 per cent in December rather than rising 1.5 per cent as predicted.
Speculation surrounding Friday’s Canadian employment figures also restrained the CAD.
If the jobs data shows another shocking decline in the number of employed the Canadian Dollar could end the week on a low.
Tomorrow’s ECB rate decision and policy announcement is likely to impact EUR/CAD trading, as is German factory orders data.
However, Canada’s Ivey Purchasing Managers Index will also be of interest to investors given the mixed bag of PMI reports to emerge from developed nations over the last week.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3511,
Euro,,British Pound,0.8295 ,
Euro,,Australian Dollar,1.5141,
Euro,,New Zealand Dollar,1.6468,
Euro,,Canadian Dollar,1.5013 ,
[/table]
