Key Moments
- EUR/CAD trades around 1.6030 in early European dealings on Monday, holding earlier losses.
- Germany’s June PPI rises 1.8% YoY but falls 0.3% MoM, undershooting the expected 0.2% decline.
- Canadian Dollar strengthens as oil prices climb nearly 20% in July amid escalating US-Iran tensions.
Euro Pressured as German PPI Undershoots Expectations
EUR/CAD remains under pressure in early European trading on Monday, hovering near 1.6030 after trimming intraday losses. The cross stays in negative territory as the Euro weakens in the wake of the latest German Producer Price Index (PPI) release.
Germany’s PPI increased 1.8% year-over-year in June, extending a three-month streak of producer price inflation. This follows May’s 2.2% annual rise, which had been the strongest gain since May 2023. On a month-over-month basis, however, producer prices slipped 0.3%, reversing May’s 0.3% increase and marking the first monthly pullback since February. The decline was marginally larger than the 0.2% drop anticipated by markets.
| German PPI | June Result | Previous | Market Expectation |
|---|---|---|---|
| Year-over-year | 1.8% | 2.2% | Not stated |
| Month-over-month | -0.3% | 0.3% | -0.2% |
Oil Rally Supports CAD as Geopolitical Risks Intensify
The Euro’s decline against the Canadian Dollar is compounded by renewed strength in the commodity-linked CAD, which is drawing support from higher crude prices. As one of the world’s major crude exporters, Canada’s currency is often sensitive to shifts in oil markets, with price moves feeding directly into CAD performance.
Crude prices have advanced sharply as rising hostilities between the United States and Iran fuel concerns about disruptions to key Middle Eastern supply routes. Oil has jumped nearly 20% in July as an interim peace arrangement between Washington and Tehran has unraveled, the US has reinstated a blockade of Iranian ports, and Iran has stepped up attacks on shipping traffic near the Strait of Hormuz.
The United States has now carried out its ninth straight night of strikes on Iranian targets. In turn, Iranian officials have stated that the ceasefire between the two sides is effectively over, escalating the risk of broader interference with vital energy corridors that pass through the region’s narrow waterways.
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