The euro fell against the loonie on Friday following the release of worse-than-anticipated German factory orders data for March and a steep decline in Eurozone retail sales in the same period. The euro’s decline was also fueled by overwhelmingly optimistic Canadian job additions in April. Overall, the EUR/CAD pair declined from a high of 1.4920 to a low of 1.4735 in the past 24 hours.
According to Destatis, German factory orders fell by 10.70% m-o-m in March, following an increase of 4.50% in the previous month and worse than forecasts of a 2.40% decline. The reported figure reflects the steepest drop in fresh orders since April 2020.
Fresh orders declined by 14.10% m-o-m in the capital goods sector in March. Intermediate goods fell by 7.50% in the same period. However, fresh orders in the consumer goods industry grew by 1.20%. While overseas orders dipped by 13.30%, domestic orders declined by 6.80%.
New orders grew by 0.20% in the March 2023 quarter. Devoid of large-scale orders, fresh orders fell by 7.70% m-o-m in March 2023.
On a y-o-y basis, German factory orders plunged 11% in March.
The Eurozone retail sales declined by 1.20% m-o-m in March, following a drop of 0.20% in the previous month and worse than the 0.20% decrease forecast by economists.
The decline was led by a 1.40% drop in food, drink, and tobacco retail trade volumes. Non-food products posted a decrease of 1.10%. However, automotive fuels recorded a rise of 1.60%.
On a y-o-y basis, Eurozone retail sales fell by 3.80% in March 2023. Food, drinks, and tobacco posted a decline of 6.80%. Likewise, non-food products recorded a drop of 2.20%. On the contrary, automotive fuels recorded a 3.50% increase in the volume of retail trade.
According to Statistics Canada, the country’s economy added 41,400 jobs in April, following an addition of 34,700 jobs in the previous month, which pleased economists who were expecting only 21,600 job additions.
Part-time employment rose by 48,000 in April, while full-time employment remained almost unchanged. The reported figure reflects the first significant rise in part-time work since October 2022.
Last month, 18.10% of the employees were working part-time, a decline from 18.70% in April 2022.
Wholesale and retail trade added 24,000 jobs. Likewise, transportation and warehousing added 17,000 jobs. While information, culture, and recreation added 16,000 jobs, education services added 15,000 jobs. On the contrary, employment fell by 14,000 in business, building, and other support services.
The count of private sector employees increased by 299,000 in April 2023, compared with last year. Also, the public sector added 81,000 employees.
On a y-o-y basis, average hourly wages grew by 5.20% (or C$1.66) to $33.38 in April 2023.
The unemployment rate stood unchanged from the previous month at 5.0% in April. In fact, the unemployment rate has remained unchanged since December 2022. Economists had anticipated a rise in the unemployment rate to 5.10%.
The weak Eurozone economic data is expected to keep the EUR/CAD pair slightly bearish in the short term.
The historical price chart indicates that the EUR/CAD pair is declining after failing to break the resistance level of 1.5105. The next support is anticipated only near 1.4625. Additionally, the currency pair is trading below its 50-day moving average, while the stochastic indicator is in the bearish zone. Therefore, we anticipate the EUR/CAD pair to remain in a downtrend in the near term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
