Euro bears extended their stay in the markets while the Greenback managed to pare its losses during the New York session. Loonie strength was also in play as BOC rate hike expectations picked up.
- U.S. consumer credit rose from $20.5B to $28B vs. $17.8B forecast
- FOMC voting member Bostic: Needs to see higher inflation before voting for rate hikes
- Bostic: Projects 2-3 rate hikes this year
- FOMC voting member Williams: Price-level targeting to leave central banks with less room to cut
- BOC Business Outlook survey: Sales outlook is positive but moderation expected
- BOC Business Outlook Survey: Business expansion eyed on stronger investment and employment intentions
Positive BOC Business Outlook Survey
Loonie bulls renewed their BOC rate hike hopes following last week’s upbeat Canadian jobs release and the winter BOC Business Outlook Survey.
Policymakers shared strong expectations for sales activity but projected some moderation. More business expansion is eyed, stemming from a rebound firms’ investment and employment intentions since the previous survey.
BOC officials also highlighted the pickup in hiring as evidence of tightening in several sectors, except in energy-producing industries where some economic slack is still seen.
When it comes to inflation, officials also predict that input prices will rise due to the increase in commodity prices. These higher costs are expected to be passed on to consumers, although wage pressures are still projected to be limited due to competitive forces.
In summary, the Business Outlook Survey indicator was able to rebound to its summer peak, buoyed by stronger input price growth expectations and investment intentions.
A bit of risk appetite
Wall Street was still in a good mood to start the week as the S&P 500 index and Nasdaq chalked up another set of record highs even as the Dow lagged.
- Dow 30 index is down 12.87 points to 25,283.00 (-0.05%)
- S&P 500 index is up 4.56 points to 2,747.71 (+0.17%)
- Nasdaq is up 20.83 points to 7,157.39 (+0.29%)
Economic data from Uncle Sam was better than expected, with the consumer credit figure for November surging to $28 billion from the earlier $20.5 billion reading. This was also better than the projected dip to $17.8 billion.
Components of the report revealed that the jump was spurred by shopping sprees around the Thanksgiving holidays. Credit card debt, in particular, was up by $11.2 billion, which is its second highest monthly gain on record. Propped up by the bitcoin buying spree as well, perhaps?
This brought total consumer debt to $3.287 trillion, marking an annualized 8.8% gain to reach its highest level since November 2001. Auto and student loans were also up for the month.
Major Market Mover(s):
The oil-related Loonie raked in gains across the board thanks to revived BOC hike expectations from the Business Outlook Survey.
CAD/JPY is up to 91.16, EUR/CAD retreated to a low of 1.4862, GBP/CAD is down from a high of 1.6968 to a low of 1.6758, and USD/CAD fell to a low of 1.2355.
The dollar managed to catch a bid against most of its peers later in the day, likely due to another record close for US equities.
EUR/USD fell further to a low of 1.1955, GBP/USD is treading sideways around 1.3575, USD/JPY bounced from 112.90 to 113.15, and USD/CHF climbed to .9775.
Watch Out For:
- 1:00 am GMT: Japanese average cash earnings y/y (0.6% expected)
- 1:00 am GMT: U.K. BRC retail sales monitor y/y (0.6% previous)
- 1:30 am GMT: Australian building approvals m/m (-0.9% expected)
- 1:30 am GMT: Australia’s ANZ job advertisements (1.5% previous)
- 6:00 am GMT: Japanese consumer confidence index (increase from 44.9 to 45.1 expected)