The euro dollar remained range-bound against the Canadian dollar despite the release of upbeat Italian retail sales data. The decline in German industrial production and wider than anticipated French trade deficit weakened the euro’s momentum against the loonie. The poor Ivy PMI data from Canada also prevented the Canadian dollar’s rally against the euro. In the past 24 hours, the EUR/CAD pair remained range-bound between 1.5615 and 1.5665.
According to German statistical organization Destatis, industrial production declined 0.2% m-o-m in August, compared with a growth of 1.4% in the earlier month. Economists had anticipated the German industrial production to grow by 1.5%. On a y-o-y basis, industrial production plunged 9.6% in August 2020.
Data published by the French Ministry for the Economy and Finance indicates that the country’s trade deficit widened to €7.70 billion in August, from €7 billion in the prior month and worse than the trade deficit of €6.50 billion anticipated by economists.
The Italian statistical organization Istat (Istituto Centrale di Statistica) has stated that the country’s retail sales rebounded by 8.2% in August, after declining by 6% in July. The market had anticipated retail sales to increase 3.8% in the reported period. Notably, the reported figure indicates that retail sales have almost reached pre-pandemic February levels. Retail sales volume grew 11.2% m-o-m in August.
In the three months ended August, retail sales value increased 22.8% compared with the previous three months. Likewise, retail sales volume increased 22.4%. As lockdown was in full swing in March and April, the retail sales recorded strong growth in terms of value and volume in the three months to August. On a y-o-y basis, retail sales, in terms of value, increased 0.8% in August 2020.
It was the first y-o-y increase since February 2020. After recording a decline in the earlier months, large-scale distribution increased 0.4% in August. Small-scale distribution remained in the negative zone, declining by 0.5%. Non-store retail sales dropped 3.3% y-o-y in August 2020.
However, online sales increased 36.8% y-o-y. Computers and telecommunications hardware recorded the most robust growth of 12.3%. Tools followed suit with an increase of 8.4%. Stationery recorded the sharpest decline of -7.7%.
In Canada, data published by the Richard Ivey Business School indicated that the purchasing manager’s index (PMI) declined to 54.30 in September, from 67.80 in the earlier month. Economists had anticipated a reading of 64.50. The index reading reflects m-o-m changes in economic activity. The index reading stood at 48.70 in September 2019, reflecting a contraction of the economic activity.
Ivey employment index reading increased to 53.80 in September, from 56.1 in the prior month. Similarly, the Ivey prices index was 60.30 in September, compared with 57.60 in August. However, the Ivey inventories index declined to 44.10 in September, from 50.90 in the previous month. Also, Ivey suppliers’ deliveries index decreased to 40.70 in August, from 51.30 in the earlier month.
The mixed Eurozone data and weak Ivy PMI data from Canada is expected to keep the EUR/CAD pair range-bound in the near-term.
Technically, the EUR/CAD pair is trading above the support level of 1.5615. The next resistance is anticipated only near 1.5665. Additionally, the momentum indicator remains flat. Therefore, we are expecting the currency pair to trade within the range mentioned above for the next few days.
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.
