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Uncle Sam’s reports came in mostly stronger than expected, supporting rate hike hopes for next week’s Fed decision.

In contrast, not-so-upbeat numbers from Canada and persistent NAFTA concerns dragged the Loonie to record lows.

  • Canadian ADP non-farm employment change up by 32.7K in Feb
  • Canada’s January ADP figure downgraded from 10.7K to -2.3K
  • Canadian existing home sales down by 6.5%, following previous 14.5% drop
  • Empire State manufacturing index up from 13.1 to 22.5 vs. 14.9 forecast
  • Philly Fed index fell from 25.8 to 22.3 vs. 23.1 forecast
  • U.S. import prices up by 0.4% vs. 0.3% consensus, 0.8% previous
  • U.S. NAHB housing market index dipped from 71 to 70 vs. consensus at 72
  • U.S. TIC long-term purchases jumped from $23.3B to $62.1B vs. $35.9B forecast
  • U.S. Treasury announces more sanctions on Russia
  • U.S. equity indices end mixed, commodities in the red

Major Events/Reports:

Mostly positive U.S. medium-tier data

There were no major catalysts lined up on the U.S. economic calendar, but it seemed that dollar bulls were pretty happy with how the latest batch of medium-tier releases turned out.

The Empire State manufacturing index surged from 13.1 to 22.5 to reflect a stronger pace of expansion, outpacing the consensus at 14.9. Even though, the Philly Fed index weakened from 25.8 to 22.3, lower than the projected dip to 23.1, traders took note of the fact that underlying components still suggested further growth.

Initial jobless claims also turned out slightly better than expected at 226K versus the 227K forecast, also coming in lower than the earlier 230K increase in unemployment.

Import prices suggested slightly stronger domestic inflation with a 0.4% gain versus the projected 0.3% uptick in February. However, this was lower than the earlier reading, which was downgraded from 1.0% to 0.8%.

Lastly, the TIC long-term purchases report posted an impressive jump from $23.3 billion to $62.1 billion, reflecting significantly stronger foreign demand for U.S. long-term securities.

Disappointing data from Canada

The Great White North wasn’t as fortunate as its North American neighbor as downbeat data reinforced the shift to a less hawkish stance shared by Poloz in his speech earlier in the week.

In particular, analysts pointed to the 6.5% fall in existing home sales for February, which dragged the overall reading down to its lowest level in five years. This comes after a sharp 13.5% tumble recorded in January. On a year-over-year basis, Canada’s existing home sales are down 16.9%. Ouch!

Although this was partly due to new mortgage rules taking effect this year, traders were also quick to realize that this might be one more reason for the BOC to hold off any additional rate hikes.

Meanwhile, ADP reported that Canada saw a 32.7K gain in employment for February. Components revealed that the increases were mostly from the education and healthcare sectors. However, the rest of the report also revealed that the January reading was downgraded from 10.7K to -2.3K.

Major Market Mover(s):

USD

The scrilla smoked out the rest of its peers for the most part of the session, but gave up some of its gains to the yen when Mueller issued a subpoena for Russia-related documents from Trump’s organization.

EUR/USD is down from 1.2362 to a low of 1.2300, USD/CHF popped up to a high of .9521, GBP/USD sank to 1.3930, and AUD/USD slipped below the .7800 mark.

JPY

The yen was the one currency to rule ’em all by the end of the session, raking in gains against its higher-yielding rivals and the Greenback.

EUR/JPY is down to a low of 130.57, GBP/JPY fell to the 147.50 minor psychological mark, NZD/JPY resumed its drop to 76.88, and AUD/JPY is down to 83.41.

CAD

The Loonie fell behind the Kiwi, which was the worst-performing currency in the earlier session, when Canada’s reports disappointed and NAFTA jitters lingered.

USD/CAD bust through the 1.3000 handle to a high of 1.3070, CAD/JPY slipped to 81.15, EUR/CAD bounced to a high of 1.6104, AUD/CAD is up to 1.0170, and NZD/CAD rebounded to .9518.

Watch Out For:

  • 4:30 am GMT: Japanese revised industrial production (no change from -6.6% expected)