- U.S. Nov headline and core CPI up by 0.2% as expected
- Philly Fed index jumped from 7.6 to 21.5 vs. 9.1 consensus
- Empire State manufacturing index up from 1.5 to 9.0 vs. 3.2 consensus
- U.S. flash manufacturing PMI improved from 54.1 to 54.2 as expected
- U.S. initial jobless claims at 254K vs. 258K previous
- Canadian manufacturing sales slipped 0.8% vs. projected 0.7% gain
- BOC Gov Poloz: Canadian economy managed well through oil slump
- Poloz: Housing market pressures eased considerably
The Greenback’s fans showed no signs of exhaustion from the after-party as strong U.S. reports kept the bullish energy going.
Upbeat U.S. economic data – Uncle Sam’s reports came in the green, underscoring the Fed’s view that the economy could continue to expand moderately in the coming months.
Manufacturing indices showed impressive rebounds from their earlier slump, with the Philly Fed index soaring from 7.6 to 21.5 to show a much stronger pace of expansion compared to the 9.1 consensus. The Empire State manufacturing index also posted a stellar gain from 1.5 to 9.0, higher than the estimate at 3.2 for November. Meanwhile, the flash manufacturing PMI for the current month advanced from 54.1 to 54.2 as expected.
On the jobs front, the initial jobless claims showed positive momentum as it came in at 254K, down from the earlier 258K reading. Headline and core CPI for November met expectations of a 0.2% gain, buoyed mostly by higher prices of shelter and gasoline even as the food price index held steady.
BOC Governor Poloz’s speech – The BOC head honcho spoke mostly about the Canadian housing sector during his testimony but managed to inject a bit more confidence in the economy as well.
BOC Governor Poloz held a press conference to discuss the central bank’s Financial System Review, which confirmed that property market pressures are easing. This suggests that the BOC is no longer as worried about a housing bubble as it used to be, as Poloz reiterated that new housing market measures have been targeting areas where the vulnerabilities were highest.
When asked about the FOMC rate hike, he praised the U.S. economy for achieving a firmer outlook and assessed that the monetary policy adjustments have been made on strong footing. He added that the Canadian economy has managed to well through the oil slump but that they still have a lot of work to do.
Major Market Movers:
USD – The Greenback extended its gains against most of its major counterparts, although a few signs of profit-taking have materialized.
EUR/USD broke below the 1.0500 handle to a low of 1.0365, USD/JPY popped up to a high of 118.67 then retreated to 117.66, USD/CHF advanced to a high of 1.0344 then dipped back below 1.0300, and AUD/USD tumbled from .7400 to a low of .7347.
CAD – Even though the Canadian economy printed a weak manufacturing sales figure, Poloz’s testimony managed to keep the currency afloat.
USD/CAD found resistance at 1.3398 then dropped back to 1.3340, CAD/JPY carried on with its climb to a high of 88.93, and EUR/CAD fell from 1.3967 to a low of 1.3878.
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