The EUR/CAD currency pair scaled a fresh one-month high of 1.4973 on Tuesday, after German inflation data and ahead of the outcome of the Bank of Canada’s and the European Central Bank’s policy meetings this week.
Final data showed on Tuesday that annual consumer price inflation in Germany had been confirmed at a four-month high of 2.2% in November. That was an acceleration from 2% in October and it matched the preliminary figure.
German core CPI inflation picked up to a six-month high of 3% in November.
ECB to set policy rates on Thursday
On the central bank monetary policy front, the European Central Bank is largely expected to lower its main refinancing operations rate by 25 basis points to 3.15% at its December policy meeting. And, the ECB deposit facility rate is expected to be reduced to 3.00% from 3.25% currently.
Although inflation is expected to pick up in the short term, it should ease toward the 2% objective next year.
Annual consumer price inflation in the Euro Area rose to 2.3% in November from 2% in October, accelerating for a second straight month.
The acceleration was expected due to base effects, since the steep declines in energy prices from 2023 are no longer factored into the annual rate.
Core CPI inflation, on the other hand, remained steady at 2.7% in November.
ECB policy makers noted wage growth was still elevated, but yet, pressures were easing.
Market players will be closely watching ECB President Christine Lagarde’s press conference for any hints regarding future interest rate trajectory. Investors will be also looking into a new set of ECB economic projections.
Bank of Canada expected to deliver 50 basis point rate cut on Wednesday
Meanwhile, the Bank of Canada is expected to lower its benchmark interest rate by 50 basis points to 3.25% at its December policy meeting.
This would follow the 50 bps rate cut the BoC delivered in October amid a sharp slowdown in Canadian CPI inflation. Headline inflation slowed to 1.6% in September, coming in below the central bank’s 2% target for the first time in three years.
Currency Pair Performance
The EUR/CAD currency pair was last inching up 0.09% to trade at 1.4968. The minor Forex pair earlier advanced to 1.4973, a level not seen since November 8th.
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