German data lift euro against Canadian dollar

• Germany’s October Manufacturing PMI was confirmed at 54.2, indicating robust expansion and lending support to EUR/CAD.
• A 2.0% month-on-month fall in German Retail Sales in September undershot forecasts for a 0.4% increase, reflecting weaker spending.
• The Canadian Dollar could come under pressure from lower oil prices after OPEC+ opted to leave December output targets unchanged.

Up over 0.5%, EUR/CAD trades near 1.5680 in Monday’s Asian session, extending the previous day’s modest advance. The cross is being supported by continued Euro (EUR) strength following the publication of German economic figures.

At 54.2, the final October reading for the S&P Global Germany Manufacturing PMI was the second-highest in almost four-and-a-half years, surpassed only by August’s recent peak and up from September’s 53.9. By contrast, German Retail Sales, an important gauge of consumer spending, fell 2.0% month on month in September after rising 1.2% in August, revised from 1.3%. Markets had expected a 0.4% increase. On an annualised basis, September’s Retail Sales reading was -2.3%, following a 0.3% decline previously, revised from -0.4.

Lower oil prices could put pressure on the commodity-linked Canadian Dollar (CAD), helping EUR/CAD advance. Crude weakened after OPEC+ agreed to leave December oil production targets unchanged, maintaining required output at September levels. The agreement sets Saudi Arabia’s allocation at 10.478 million barrels per day (bpd), Russia’s at 9.949 million bpd and Iraq’s at 4.431 million bpd.

Crude also came under pressure as investors balanced continuing diplomatic attempts to resolve the Middle East conflict against concerns about fresh US military action against Iran. In a third consecutive day of talks, Qatari and Iranian officials sought an agreement to end the war before the US midterm elections.

Rising energy prices deepen market strain amid doubts over AI trade

Reviewing the past month, Deutsche Bank strategists describe several pressures converging as “investors grappled with mounting doubts around the AI trade, French sovereign stress, and higher energy prices.” Their assessment notes that Brent crude “(+13.6%) extended its rise amid concerns over renewed US-Iran escalation,” illustrating the direct effect of geopolitical tensions on energy markets. Tightening European gas markets added to the difficulties facing risk assets, with “European natural gas [rising] above €100/MWh for the first time since 2022,” compounding an already demanding market backdrop.