Robust Industrial Production In France, Italy Keeps Euro Strong

Robust Industrial Production In France, Italy Keeps Euro Strong

The euro dollar weakened last week as traders started winding down their short position in the US dollar. Furthermore, the relatively high unemployment rate of 8.7% and low inflation rate of about 1% are other reasons for the euro’s decline against the Canadian dollar. Interest rate differentials and rising crude oil prices have also started boosting the Loonie against the euro.  Since February 6th, the EURCAD pair has declined about 100 pips to trade at 1.5390. We anticipate a trend reversal to happen this week due to reasons given below.

According to the French National Institute of Statistics and Economic Studies, the French Industrial Production rose 0.5% m-o-m in December, compared with a 0.3% decline in November. Economists had expected the industrial production to grow 0.1% in December. Software, metallurgy, and electronic goods led the growth in December industrial production.

For the third successive month in a row, Italy’s industrial production grew at a faster-than-anticipated pace, the statistical office Istat reported Friday last week. Industrial production increased by a seasonally adjusted 1.6% m-o-m in December, well above the 0.2% increase posted in November. Analysts had expected a 0.8% increase in December.

On an annualised basis, industrial production expanded by 4.9% in December, following a 2.3% increase in the earlier month. Economists had expected the growth to ease to 1.9%. While the Euro zone posted impressive economic data, employment data from Canada was not impressive.

The Canadian economy lost 88,000 jobs in January, versus economists’ expectation of an addition of 10,300 jobs. During the previous month, the economy added 78,600 jobs. Part-time employment decreased by 137,000, while full-time employment increased by 49,000. Furthermore, according to Statistics Canada the unemployment rate nudged upwards by 0.2% m-o-m to 5.9% and missed analysts’ estimates of 5.8%. In December, the unemployment rate stood at 5.7%. Therefore, economic data favour a short-term rally in the EURCAD pair.

The EURCAD pair is trading near the support level of 1.5375. Furthermore, the stochastic oscillator is moving in the bullish zone. The currency cross is also trading above the 50-day moving average. Therefore, we anticipate a rally in the EURCAD pair.

EURCAD-Technical Analysis - 13th February 2018

To capitalise on the expected uptrend, we are may go long near 1.5400 in the EURCAD pair, with a stop loss order below 1.5310. Additionally, we will also place an order to book profit near 1.5620.

Similarly, in the binary market, we may bet on a call option to benefit from the rise of the EURCAD pair. An investment may be considered only if the binary broker offers us a contract valid until February 21. Furthermore, the EURCAD pair should be trading near 1.5400 in the Forex market.

Disclaimer: The trading analysis offered here is our opinion. It is not provided as trading advice, merely an indication of our trading plan. We cannot guarantee success and we encourage traders to incorporate a strong money management strategy to limit losses. Please use this article as part of your own research before formulating strategies prior to trading.

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