Euro remains steady against Canadian Dollar following Germany's IFO business data

• EUR/CAD maintains its position as the German IFO Institute Business Climate Index improves to 90.2 in October.
• Deutsche Bank notes Moody's keeping France at Aa3 (negative outlook) defied expectations, offering market relief.
• The Canadian Dollar faced pressure as crude oil fell after President Trump ruled out immediate military action against Iran.

EUR/CAD depreciates after opening at a bullish gap, remaining in positive territory and trading around 1.5710 during European hours on Monday. The currency cross moves little following the release of Germany’s IFO business data.

 The German IFO Institute Business Climate Index improves to 90.2 in October, from 89.9 in September, against the market expectations of 89.8. However, the IFO Current Assessment Index drops to 88.8 from the previous reading of 89.5. Expectations Index, an early indicator of current conditions and business expectations for the next six months, accelerates to 91.6 from the prior release of 90.4.

France gains breathing room as Moody’s holds Aa3 rating

Analysts at Deutsche Bank highlight that France received a reprieve at the end of last week, noting that the sovereign “got a boost on Friday night as Moody’s defied market expectations and maintained their Aa3 rating (negative outlook).” This decision, they suggest, helped steady market nerves after recent volatility around French assets, even as investors remain mindful that the negative outlook keeps the risk of future action on the radar.

The EUR/CAD cross holds gains as the commodity-linked Canadian Dollar (CAD) faces challenges amid lower oil prices. Crude oil prices declined after US President Donald Trump ruled out immediate military action against Iran, stating, “there will not be a strike today,” according to Al Jazeera. This followed earlier remarks where Trump suggested Washington might need to “finish the job” or potentially reach a deal with Tehran amidst growing Iranian and Houthi threats against American interests in the region.

Rabobank sees BoC holding fire at October meeting

Strategists at Rabobank write that they “expect the Bank of Canada to hold the overnight policy rate at 2.25% at the October 28 meeting,” underscoring their view that the BoC will resist market pressure for further tightening and keep policy steady at its current setting.