The euro fell against the loonie on Friday following the release of worse-than-anticipated German factory order data for November. The Eurodollar sell-off was also fueled by overwhelmingly optimistic Canadian employment change data for December. Overall, the EUR/CAD pair declined from a high of 1.4330 to a low of 1.4235.
According to Destatis, the German factory orders declined 5.30% m-o-m in November, following a 0.60% increase in the prior month and worse than forecasts of a 0.50% decline. Factory orders, devoid of bigger ones, fell by 2.90% m-o-m in November 2022.
Overseas orders declined by 8.10%. During the same period, domestic orders dropped by 1.10%. Also, producers of capital goods posted an 8.50% decrease in orders. Likewise, producers of intermediate goods reported a 0.90% drop in fresh orders. Consumer goods orders inched lower by 0.70%.
On a y-o-y basis, German factory orders plummeted 11% in November 2022, reflecting the lowest level since July 2020.
In a separate news release, Destatis stated that German retail sales grew by 1.10% m-o-m in November, following a 2.80% decline in the prior month, but missed forecasts of 1.50% growth.
On a y-o-y basis, German retail sales dipped 5.90% in November 2022. Overall, compared with 2021, the country’s retail sales inched lower by 0.30% in 2022.
The Eurozone consumer price index jumped 9.20% y-o-y in December, following a 10.10% increase in the earlier month and a few notches lower than the 9.60% growth anticipated by economists.
The flash estimate provided by Eurostat also indicated that energy prices rose by 25.70% in December, while food, alcohol, and tobacco recorded a 13.80% increase. Non-energy industrial goods posted a growth rate of 6.40%. Likewise, services reported an increase of 4.40%.
Excluding energy, food, alcohol, and tobacco, the Eurozone core consumer price index (flash estimate) surged 5.20% y-o-y in December, following a 5% rise in November and a notch higher than the 5.10% growth anticipated by economists.
The Eurozone retail sales rebounded with a growth of 0.80% m-o-m in November, following a decline of 1.50% in the prior month, and surpassed forecasts of a 0.50% increase.
While non-food products recorded a 1.60% rise in the volume of retail trade in November, automotive fuels posted a growth of 1%. On the contrary, food, drinks, and tobacco reported a decline of 0.90%.
On a y-o-y basis, Eurozone retail sales fell by 2.80% in November 2022. Food, drinks, and tobacco recorded a 4.60% decline in the volume of retail trade in November 2022, while non-food products posted a 2.30% decrease. On the contrary, automotive fuels posted a 4.40% rise.
According to Statistics Canada, the country’s economy added 104,000 jobs in December, following an addition of 10,100 jobs in the prior month and pleasing economists who were expecting only an addition of 5,500 jobs.
Correspondingly, for the third month in a row, the jobless rate inched lower to 5% in December, from 5.10% in November, and surpassed forecasts of 5.20%. Notably, Canada’s unemployment rate fell to a record low of 4.90% in June and July last year. The number of employees who were absent in December was 8.10%, compared with 6.80% in November.
On a y-o-y basis, the average hourly wage growth of employees was 5.10% (up $1.57 to $32.06) in December 2022, reflecting the seventh successful month above 5%.
The rise in employment was led by a third successive month of increases in full-time work. Specifically, 85,000 full-time job additions were recorded by the economy.
Employment grew by 394,000 in the year that ended in December 2022. The increase was mainly due to 401,000 more full-time jobs. Private sector employment rose by 112,000 in December, reflecting the largest rise since February 2022.
The adjusted unemployment rate, which takes into account people who are in need of a job but did not give it a try, declined from 0.20% to 6.80% in December. The participation rate rose by 0.20% to 65% in December.
The number of people working in the construction sector grew by 2.30% (or 35,000) in December. Transportation and warehousing added 29,000 jobs. Likewise, information, culture, and recreation reported an addition of 25,000 jobs in December. Also, professional, scientific, and technical services recorded an addition of 23,000 jobs.
While public administration added 11,000 jobs, accommodation and food services posted an addition of 13,000 jobs. However, healthcare and social assistance posted a loss of 17,000 jobs.
The unexpectedly weak German factory order data is expected to keep the EUR/CAD pair range-bound in the short term.
Technically, the EUR/CAD pair is declining after facing resistance at 1.4515. The next major support is anticipated only near 1.4175. Additionally, the currency pair is trading below its 50-day moving average, while the RSI indicator is showing a reading below 50. Therefore, we anticipate the EUR/CAD pair to remain in a downtrend in the days ahead.
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.
