EUR/CAD falls to almost 1.5100 after EMU HICP data, inflation in Canada in sight

• EUR/CAD is losing ground following important economic data from the European Monetary Union.
• The EMU HICP remained unchanged in July compared with the previous month, while core inflation declined by 0.2%.
• The commodity-linked CAD is rising despite a series of losses in WTI prices.

EUR/CAD is giving up its recent gains of the past two days following key business activity and consumer price data from the European Union. The pair is trading around 1.5100 during Tuesday's European session.

As expected, data on the Harmonised Index of Consumer Prices (HICP) of the European Monetary Union (EMU) showed no change in July compared to the previous month. The core HICP, meanwhile, fell by 0.2%, in line with the decline observed in June.

As expected, the German producer price index (PPI) fell by 0.8% year-on-year in July, after previously falling by 1.6%. Meanwhile, the monthly index recorded an increase of 0.2%, also as expected.

Investors expect the European Central Bank (ECB) to cut interest rates gradually. However, ECB policymakers are hesitant to commit to a specific rate-cutting path, fearing that price pressures could increase again.

The commodity-dependent Canadian dollar (CAD) is outperforming expectations and undermining the EUR/CAD pair despite the continued downward movement in crude oil prices. West Texas Intermediate (WTI) oil prices are continuing their losing streak for the third day in a row and are trading at around $72.90 per barrel at the time of writing. This downward trend is being attributed to the de-escalation of geopolitical tensions in the Middle East.

On Monday, US Secretary of State Antony Blinken announced that Israel had agreed to a proposal to resolve the issues delaying a ceasefire in Gaza and called on Hamas to follow suit. However, senior Hamas official Osama Hamdan criticized Blinken's statement that Israeli Prime Minister Benjamin Netanyahu had accepted an updated proposal. Hamdan claimed it “raises many ambiguities” and is “neither what was presented to us nor what we agreed to,” according to Reuters.

Traders will likely focus on the risks of slower economic growth in Canada and position themselves ahead of the release of consumer price index (CPI) data by Statistics Canada, scheduled for later in the North American session. This inflation report is expected to point to a further decline in inflation in July, which could potentially allow the Bank of Canada (BoC) to continue its monetary easing cycle.