Euro Holds Gains Despite Weak German Retail Sales Data

The Euro has maintained its gains against the Canadian Dollar despite weak German Retail Sales data. According to recent numbers, German Retail Sales grew 1.3% month-on-month (MoM), falling short of the estimated 2.0% expansion. This comes after a sharp contraction in July was revised upward to -3.2% from -3.4%. On an annualized basis, Retail Sales contracted by 0.4% in August following a 2.5% drop in July.

The market is now shifting its focus toward the upcoming German Unemployment Change for August and the preliminary Harmonized Index of Consumer Prices (HICP) data for September, where price pressures are projected to accelerate to 3.1% year-on-year from 2.9% in August. Meanwhile, strength in the commodity-linked Canadian Dollar is being capped by a recovery in oil prices, which have gained momentum after US President Donald Trump denied willingness to ease sanctions on Iran.

Economists at NBC argue that 'this morning’s GDP report confirms that the Canadian economy's rebound lost some momentum in the third quarter,' even as the latest data stop short of signaling an outright stall. They highlight that Statistics Canada’s preliminary estimate points to a 0.2% increase in GDP in August, suggesting that activity is still expanding, albeit at a more subdued pace than in the preceding months.