The euro remained range-bound against the greenback on the first trading day of the week, despite the release of unexpectedly weak German wholesale price data for November. Notably, Canada’s manufacturing sales data for November exceeded expectations. The market anticipates another rate hike by the ECB (European Central Bank) this week. This is the primary reason why the euro continues to hold its ground against its rivals, including the loonie. Overall, the EUR/CAD pair traded in a range of 1.4623 and 1.4684 in the past 24 hours.
According to Destatis, German wholesale prices fell by 0.60% m-o-m in December following a 0.20% decline in the previous month and missed forecasts of a 0.20% increase.
The decline was led by mineral oil products, whose wholesale prices decreased by 4.60% m-o-m in December.
On a y-o-y basis, German wholesale prices dropped by 2.60% in December 2023. The wholesale prices of mineral oil products decreased by 9.80% y-o-y in December 2023. Likewise, grain, unmanufactured tobacco, seeds, and animal feeds fell by 19.70% y-o-y in December 2023. The wholesale price of chemical products dipped by 19% in the same period. While metals and metal ores declined by 12.70%, waste and scrap fell by 7.60%.
On the contrary, wholesale prices of fruit, vegetables, and potatoes rose by 13.90% y-o-y in December 2023. Sugar, confectionary, and bakery products grew by 8.90% y-o-y in December 2023. Similarly, wholesale prices of beverages rose by 7.10% Also, tobacco prices grew by 5.80% y-o-y in December 2023.
Overall, German wholesale prices dipped 0.50% in 2023, compared with the previous year.
The Eurozone trade surplus rose to €20.3 billion in November from €11.10 billion in the previous month and surpassed forecasts of €11.30 billion.
Notably, the Eurozone recorded a trade deficit of €13.8 billion in November 2023. The Eurozone goods exports were €252.5 billion in November 2023, down 4.70% from €265.0 billion in November 2022. Likewise, goods imports were €232.2 billion in November 2023, a decrease of 16.7% from €278.8 billion in November 2022.
According to Statistics Canada, the country’s manufacturing sales rebounded with a growth of 1.20% m-o-m in November to C$71.70 billion following a decline of 2.90% in October and exceeded the market’s expectations of 0.90% increase.
The manufacturing sales of chemicals rose by 6.60%m-o-m in November. Likewise, primary metal and machinery grew by 4% and 4.30%, respectively. However, the motor vehicle sector recorded a decline of 4%.
Following three successive monthly declines, sales of chemical products increased 6.60% m-o-m in November. The growth was driven by a 10.10% rise in volumes.
Additionally, sales of primary metal products rebounded with an increase of 4% in November to C$5.60 billion. The growth was led by a 3.90% rise in volumes.
Motor vehicle sales fell by 4% in November to C$5.20 billion, reflecting the second successive monthly decrease.
Aggregate inventories inched up 0.50%m-o-m in November to C$124.20 billion, representing a record high. The increase was led by a 1.10% growth in processed goods and a 0.60% increase in finished product inventories.
The aggregate value of unfilled orders fell by 0.80% in November to C$101.50 billion, mainly due to a 2.50% decrease in unfilled orders of aerospace products and parts.
Aided by higher production, the capacity utilization rate for the aggregate manufacturing sector rose to 79.50% in November from 77.60% in October.
On a year-over-year basis, total sales were down 0.8% in November 2023.
The unexpectedly weak German economic data, coupled with interest-hike expectations, is expected to keep the euro range-bound against the Canadian dollar in the short term.
The historical price chart indicates that the EUR/CAD pair is ascending after testing the support at 1.4620. The next resistance is anticipated to be only near 1.4765. Additionally, the currency pair is trading above its 50-day moving average, while the stochastic indicator is rising towards the bullish zone. Therefore, we anticipate the EUR/CAD pair to begin an uptrend 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.
