Euro Gains Edge Over CAD as German Data Beats Forecasts

Key Moments

EUR/CAD Supported by German Data

EUR/CAD recovers after two consecutive daily losses, with the pair trading near 1.6160 during Friday’s European session. The cross remains underpinned as the Euro (EUR) finds support from the latest figures released by Destatis.

German Industrial Production advanced 0.2% month-on-month in June, exceeding market expectations for a 0.1% increase. The monthly gain, however, represents a moderation from May’s performance, which was revised down to 0.7% from an initially reported 0.9%. On a year-on-year basis, calendar- and seasonally-adjusted output slipped 0.1% in June after remaining unchanged in May.

Monetary Policy Outlook for the ECB

The European Central Bank (ECB) left interest rates unchanged at its most recent meeting. Current market pricing reflects an expectation of only one further rate increase from the ECB before year-end, alongside roughly a 40% probability assigned to an additional hike beyond that.

Bund Market Under Pressure from Rising Energy Prices

Oil and gas price gains are challenging the stability of German government bond trading ranges. Analysts at Commerzbank observe that “the tight German Bund ranges are being put to the test” as oil and gas prices edge higher “on the back of initial details about the Iran-Oman deal.” They add that, despite these developments, “a direct deal between the US and Iran is yet to be concluded,” leaving markets to grapple with rising energy benchmarks against a still-unresolved geopolitical backdrop.

Canadian Dollar Backed by Firm Oil Prices

Further appreciation in EUR/CAD may be constrained as the Canadian Dollar (CAD) benefits from the recent rebound in commodity markets. The currency, closely linked to energy prices, finds support from steady crude benchmarks.

West Texas Intermediate (WTI) crude is holding around $77.00 per barrel after climbing more than 4% in the prior session. The move reflects renewed concerns over supply conditions amid uncertainty surrounding the reopening of a critical maritime passage.

Energy and Geopolitics: Strait of Hormuz Risks

Crude prices face potential upside pressures as supply risks intensify, with doubts increasing over the reopening of the strategic Strait of Hormuz. The Guardian reported that Saudi Arabia plans to extend military operations against Iran-aligned Houthis in support of Yemen’s recognized government following attacks on Saudi Arabia’s southern Najran province.

At the same time, Iran’s parliament is evaluating a draft plan that would prohibit US and Israeli vessels, apply a 20% cargo penalty on hostile nations, and limit passage through the maritime route until the US blockade is removed.

Market Sentiment Around the Iran-Oman Deal

Analysts at Deutsche Bank note that “markets have edged a bit more nervously into the end of the week over the last 24 hours” as investors digested “preliminary details on the finalized Iran-Oman deal to reopen the Strait of Hormuz.” They highlight that the evolving agreement has introduced a more cautious tone across trading conditions, with participants increasingly focused on the geopolitical and transit implications of the deal as it moves toward implementation.