Euro Falls Against Canadian Dollar on Higher Oil Prices

The Euro fell against the Canadian Dollar on Monday as higher oil prices supported the CAD. The Canadian Dollar's gains were also fueled by Canada's steady headline inflation rate of 3% in August, which was in line with market expectations.

The European Central Bank (ECB) kept uncertainty around its rate outlook following a recent hike, while the Bank of Canada's policy measures remained unchanged at 2.25%. The CAD benefited from the rise in oil prices, as tensions in the Middle East elevated concerns about global supply.

According to RBC economists, Canadian inflation 'held at 3% year-over-year in August, unchanged from July,' with underlying inflation pressures described as having 'remained comparatively contained.' However, they cautioned that the risk of greater pass-through will rise if oil prices remain elevated, making the breadth and persistence of underlying price pressures more important than month-to-month movements in headline inflation.

The Canadian Dollar's strength was also attributed to the sharp increase in West Texas Intermediate (WTI) oil prices, which traded near $100 and rose over 15% this month. The higher oil prices tend to support the CAD due to its importance in Canadian exports.