EUR Steady as ECB Signals Policy Consensus; CAD Awaits Fiscal Boost

EUR: ECB members mostly on the same page
CAD: Budget might give some help to CAD

EUR: ECB members mostly on the same page

If anything, we think the ECB might cut once again, but the risks at the moment aren’t high, and we predict that the easing cycle is over.

Despite the hawkish repricing in the USD curve, the EUR/USD drop looks a bit overdone. Our short-term fair value model is now showing a 1% undervaluation, and with positioning now much more balanced, the pair can enjoy faster rallies on poor US jobs market news.

We remain optimistic on a rally into year-end to 1.18-1.20, but until US data gives the go-ahead for a rebound, there aren’t other obvious bullish drivers for EUR/USD.

CAD: Budget might give some help to CAD

It’s worth monitoring Canada’s budget announcement today. A mix of fiscally expansionary measures to support a tariff-hit economy are widely expected. The bar for debt sustainability concerns to hit CAD is elevated, so bold fiscal spending moves should be positive for CAD as the risks of more Bank of Canada cuts decrease.

But the focus should anyway stay on data. If inflation figures undershoot, the case for another cut in early 2026 (our baseline) should be compelling. On Friday, Canada also releases jobs figures for October. All the focus will be on the unemployment rate, where further increases from the current 7.1% should also fuel dovish bets.

We expect USD/CAD to hover around

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