German ZEW Survey improves but fails to lift the Euro, which weakens against the Canadian Dollar amid mixed economic signals.
EUR/CAD dips to 1.1570 in European trading, reversing three days of gains after German ZEW Survey data disappoints. The Current Situation index rose to -61.1 in August, better than the -68.8 forecast but still below July’s -77.6. Economic Sentiment climbed to 34.2, exceeding estimates of 30.0 and July’s 26.3.
Eurozone Economic Sentiment also improved to 31.4, surpassing expectations of 25.4 and the prior 23.4. Despite the uptick, the Euro struggles as the US Dollar benefits from safe-haven flows amid rising US-Iran tensions. Fed rate hike expectations soften after weaker US jobs data, with CME FedWatch Tool showing a 36.6% chance of a hike, down from 48.4% a week ago.
The US yield curve steepens, supporting the Dollar, though analysts warn of potential headwinds if Fed tightening bets continue to fade. EUR/USD also weakens as geopolitical risks overshadow modest Eurozone economic improvements.