Euro holds gains against Canadian Dollar despite weak German Retail Sales data

EUR/CAD inches higher after posting modest losses in the previous day, trading around 1.6100 during the European hours on Wednesday. The currency cross gains support as the Euro (EUR) remains resilient following mixed German consumer spending data for August.

German Retail Sales grew 1.3% month-on-month (MoM), falling short of the estimated 2.0% expansion, though July's sharp contraction was revised upward to -3.2% from -3.4%. On an annualized basis, Retail Sales contracted by 0.4% in August following a 2.5% drop in July.

Looking ahead, market focus shifts toward the upcoming German Unemployment Change for August and the preliminary Harmonized Index of Consumer Prices (HICP) data for September, where price pressures are projected to accelerate to 3.1% year-on-year from 2.9% in August.

Meanwhile, further upside for the EUR/CAD cross could be capped by strength in the commodity-linked Canadian Dollar (CAD), which draws support as oil prices have recovered their daily losses. Crude gained momentum after US President Donald Trump denied willingness to ease sanctions on Iran despite Qatar's push for peace talks.

However, gains in crude oil eventually eased as Middle Eastern supply flows improved, with regional 10-day average exports recovering to 17.5 million barrels per day, 98% of pre-war levels, supported by Saudi Arabia resuming exports through its East-West pipeline at half capacity and ongoing covert shipping through the Strait of Hormuz. Additional downward pressure on oil stems from the US government's plan to release up to 40 million barrels from the Strategic Petroleum Reserve (SPR), alongside industry reports showing a 1-million-barrel increase in US crude inventories last week.

Canada’s GDP rebound shows signs of fatigue in Q3

Economists at NBC argue that “this morning’s GDP report confirms that the Canadian economy’s rebound lost some momentum in the third quarter,” even as the latest data stop short of signaling an outright stall. They highlight that Statistics Canada’s “preliminary estimate points to a 0.2% increase in GDP in August,” suggesting that activity is still expanding, albeit at a more subdued pace than in the preceding months.