The euro weakened against the loonie yesterday following the release of lower-than-anticipated German import prices data for April. The overwhelmingly positive Canadian current account data also fueled the Eurodollar sell-off. There were no other major financial releases yesterday. Overall the EUR/CAD pair dropped from a high of 1.3675 to a low of 1.3625 in the last 24 hours.
According to the German statistical agency Destatis, the country’s import prices increased 1.80% m-o-m in April, following a 5.70% rise in the earlier month, but missed the 2.10% growth anticipated by economists.
On a y-o-y basis, German import prices surged 31.70% in April 2022, compared with 31.20% in March. A similar steep rise in prices on an annual basis was recorded only in September 1974.
Likewise, export prices increased 0.80% m-o-m in April. On a y-o-y basis, export prices jumped 16% in April 2022, compared with 15.90% in March. A similar steep rise in prices on an annual basis was recorded only in November 1974.
Energy imports skyrocketed 157.40% y-o-y in April 2022. In particular, natural gas prices jumped 301.20%, while crude recorded an increase of 77.50%.
The index of import prices, devoid of crude oil and mineral oil products, rose by 27.60% y-o-y in April 2022.
According to the preliminary data published by Spain’s National Statistics Institute, the country’s consumer prices index rose by 8.70% y-o-y in May, compared with an 8.30% rise in the prior month and a few notches higher than the 8.40% growth anticipated by economists.
Excluding non-processed food and energy products, Spain’s consumer prices index increased 4.90% y-o-y in May, reflecting the highest level since October 1995.
According to the data published by Statistics Canada, the country’s current account surplus was C$5 billion in the March 2022 quarter, following a deficit of C$137 million in the December 2021 quarter. Economists had anticipated Canada to post a current account deficit of about C$0.20 billion. The reported figure reflects the highest surplus in nearly 14 years, aided by the largest goods surplus since the global financial crisis of 2008.
The goods and services trade surplus was C$6.40 billion in 1Q 2022, a level attained for the first time since 2008. Specifically, the goods surplus was C$8.60 billion, mirroring the highest level since 2008.
Also, the services deficit widened by C$1.10 billion to C$2.20 billion in 1Q 2022.
Exports of goods rose by C$9.10 billion to C$180.70 billion in the March 2022 quarter. Energy products posted an increase of C$6.50 billion, mainly due to higher prices. Likewise, forestry products and building and packaging materials recorded a rise of C$1.60 billion.
During the same period, imports of goods grew by C$2.90 billion to C$172.10 billion. Imports of basic and industrial plastic, chemical and rubber products rose by C$1.20 billion, mainly due to robust volumes. Similarly, imports of industrial machinery, equipment, and parts grew by C$1 billion, an increase for the seventh successive quarter. The gains were partly negated by a decrease of C$1.40 billion in the import of motor vehicles and parts.
In the case of services, the travel sector surplus declined by C$0.50 billion. Additionally, the transport services deficit rose by C$0.60 billion, primarily due to an increase in the imports of air transport services associated with the movements of passengers.
Furthermore, the investment income surplus widened C$0.50 billion to C$1.20 billion in March 2022 quarter.
The weak Eurozone economic data is expected to keep the EUR/CAD pair range-bound with a slight bearish bias in the short term.
The historical price chart reveals that the EUR/CAD currency pair is declining after facing resistance at 1.3690. The next support is expected near 1.3550. Also, the EUR/CAD pair is trading below its 50-day moving average, while the stochastics indicator is in the bearish zone. Therefore, we anticipate the pair to stay in a downtrend in the short 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.
