EUR/CAD resumed its downward trend, falling to near 1.5850 during European trading hours on Thursday, following a flat session previously. The Canadian Dollar (CAD) strengthened as crude oil prices rose, reflecting Canada's position as the largest crude exporter to the United States. West Texas Intermediate (WTI) oil climbed for the third consecutive session, trading around $75.00 per barrel at the time of writing. The increase in oil prices was attributed to supply disruptions caused by ongoing conflict in the Middle East, including US and Israeli strikes on Iran, Iranian retaliatory attacks on energy infrastructure, and disruptions to key oil and gas flows through the Strait of Hormuz, which accounts for approximately 20% of global oil and LNG supply [1].
The Euro (EUR) weakened ahead of the release of January’s Eurozone Retail Sales data later in the day. Expectations for the annual Eurozone Retail Sales are for a 1.7% increase in January, up from a 1.3% rise in December. The monthly figure is anticipated to be 0.3%, compared to a previous 0.5% decline [1].
European Central Bank (ECB) Governing Council member and Bank of France Governor François Villeroy de Galhau commented that the ECB is closely monitoring energy markets amid the ongoing Middle East conflict. Villeroy stated that the duration of the conflict will determine its impact on prices but indicated there is currently no reason for the ECB to raise interest rates [1].
CONCLUSION
EUR/CAD declined as higher oil prices boosted the Canadian Dollar, driven by supply disruptions in the Middle East. The Euro weakened ahead of anticipated Eurozone Retail Sales data, while the ECB signaled it is monitoring energy markets but sees no immediate need to raise rates. The market impact is medium, with sentiment slightly negative due to geopolitical tensions and currency movements.