Euro gains against Canadian Dollar ahead of Eurozone HICP data

EUR/CAD rises after posting modest losses in the previous day, trading around 1.6010 during the early European hours on Friday. Traders are turning their attention to the upcoming preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for September, set to be released later in the day.

Meanwhile, the EUR/CAD cross is advancing as a broader retreat in global bond yields helps bolster overall market sentiment, providing underlying support to the shared currency. However, gains in the Euro (EUR) remain constrained by worsening fiscal troubles in France. According to an Associated Press report, French public debt has ballooned to 119% of GDP, driving the country's 10-year government bond yield up to 4.96%, its highest level since August 2002.

In response to the escalating crisis, French Finance Minister Roland Lescure pledged to restore fiscal discipline, aiming to narrow the budget deficit to 5% next year before bringing it down to the European Union's 3% ceiling by 2029.

France’s new budget bill tests market nerves and political resolve

Analysts at Rabobank note that France is set to unveil its latest budget plan, with policymakers “hoping to lower its budget deficit and soothe unease in the bond market.” They highlight that “both tax hikes and spending cuts have been mooted” as Paris seeks to reassure investors against a backdrop of elevated debt levels and heavy issuance. Rabobank also reminds that a “difficult passage for the budget brought down the government last year,” underscoring the political sensitivity around fiscal consolidation and the potential for renewed market focus on French risk.

Concurrently, the EUR/CAD pair is drawing strength from weakness in the Canadian Dollar, which is being weighed down by falling crude oil prices as Middle Eastern supply flows gradually return to pre-war levels. Despite this temporary stabilization in supply, investors remain cautious about whether the recovery is sustainable without a formal peace agreement, particularly following recent attacks on tankers in the Strait of Hormuz and repeated strikes on regional refineries.