Article Highlights

  • Canadian trade deficit narrowed from 4.4B CAD to 1.1B CAD
  • U.S. trade deficit widened from 36.2B USD to 42.6B USD
  • Canadian Ivey PMI down from 59.7 to 56.8 vs. 59.9 forecast
  • U.S. factory orders up 2.7% vs. 2.5% forecast in Oct
  • New Zealand GDT auction yielded 3.5% gain in dairy prices
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The Greenback made quite a comeback against its forex rivals, lifted by strong gains in U.S. equities despite mixed economic data.

Major Events:

Mixed U.S. data – Uncle Sam’s numbers were feeling the Christmas spirit, printing a mix of green and red on the economic calendar. The trade balance for October widened from the earlier 36.2 billion USD shortfall to 42.6 billion USD, larger than the projected deficit at 41.5 billion USD.

Components of the report revealed that the larger gap was due to a 1.8% decline in exports, weighed down by lower shipments of soybeans, industrial supplies, automobiles, and consumer goods. The dollar’s appreciation also put a drag on the monetary value of exports for the month. On the flip side, imports were up 1.3% during the month, buoyed by gains in purchases of petroleum goods and indicative of robust domestic demand.

Factory orders also posted a stronger than expected 2.7% gain in October versus the 2.5% forecast, chalking up a significant advance from the earlier 0.6% uptick. This marks its fourth consecutive monthly gain and its biggest surge in more than a year, confirming that the U.S. manufacturing sector has been gaining traction.

Canadian economic releases – Economic data from Canada came in mixed as well, as the country reported a smaller trade deficit of 1.1 billion CAD for October compared to the previous 4.4 billion CAD shortfall. This was spurred by a sharp 6.3% drop in imports and a 0.5% uptick in exports.

As it turns out, the month-over-month decline in imports was mostly due to an exceptionally high-value shipment from South Korea for the Hebron offshore oil project, which resulted to a one-off record high in September. Excluding imports of industrial machinery, imports were down only 0.3% during the month on lower purchases of energy products and minerals. Meanwhile, higher shipments of energy products and motor vehicles and parts allowed export activity to stay positive.

The Ivey PMI for November fell from its nine-month high of 59.7 to 58.6 instead of improving to the projected 59.9 figure, reflecting a slower expansion in the manufacturing industry. Components for deliveries and employment improved but inventories were down as companies struggled to cope with seasonal swings in demand.

Major Market Movers:

USD – The dollar got back on its feet after getting knocked down in the previous day. USD/JPY recovered from 113.82 to 114.29, EUR/USD retreated from 1.0769 to 1.0697, USD/CHF popped up from 1.0063 to a high of 1.0115, and GBP/USD fell to 1.2660.

Watch Out For:

See also:

London Session Recap

Asian Session Recap

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