- EUR/CAD struggles as the Canadian Dollar strengthens on higher WTI after Kazakhstan halted output at two major fields.
- The BoC is expected to hold rates on January 28 as Canada’s CPI inflation rose to 2.4% in December.
- Trump reiterated Greenland ambitions as Europe threatens tariffs, with the EU signaling duties on US goods.
EUR/CAD inches lower after three days of gains, trading around 1.6200 during the European hours on Wednesday. The currency cross struggles as the commodity-linked Canadian Dollar (CAD) receives support amid higher Oil prices. It is worth noting that Canada is the largest crude exporter to the United States (US).
West Texas Intermediate (WTI) Oil price extends its winning streak for the fourth consecutive day, trading around $59.60 per barrel at the time of writing. Crude Oil prices gain on a temporary halt in output at two large fields in Kazakhstan.
OPEC+ (Organization of the Petroleum Exporting Countries and its allies) producer Kazakhstan suspended production at the Tengiz and Korolev oilfields on Sunday due to power distribution issues, with output potentially remaining offline for another seven to ten days, according to Reuters sources.
Market analysts largely expect the Bank of Canada (BoC) to hold the interest rates steady for the upcoming January 28 decision following the December inflation data. The central bank is expected to keep the rates unchanged through most of 2026 due to a mixed economic picture.
Canada’s annual Consumer Price Index (CPI) inflation climbed to 2.4% in December from 2.2% in November. The monthly CPI fell 0.2% in December, compared to an increase of 0.1% in the previous reading. Meanwhile, the core inflation measures, which the Bank of Canada (BoC) closely monitors, continued to moderate in December.
The Euro (EUR) gained ground against its major, supported by stronger-than-expected German economic data. Germany’s ZEW Economic Sentiment Index surged to 59.6 in January, its highest since July 2021 and well above the 50 forecast, signalling optimism for a 2026 economic turnaround despite uncertainty over US trade policy.
Traders remain conscious amid increased trade war concerns on the United States (US)-European Union (EU) issue. US President Donald Trump said there is “no going back” on his ambitions regarding Greenland, alongside earlier threats to impose new 10% tariffs on eight EU countries, fueling concerns over slower economic growth. The European Parliament plans to suspend approval of the US trade deal agreed in July, with the decision set to be announced on Wednesday in Strasbourg, France, signaling an escalation in US–Europe tensions. Trump is scheduled to meet various stakeholders to discuss Greenland at the World Economic Forum in Davos on Wednesday.
