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Loonie breaks 50-DMA on Data

Market Analysis


The dollar slipped following the mix of data, where GDP was revised down a tenth to 3.2%, jobless claims rose more than expected to 245k, and the Philly Fed index was stronger than forecast. EURUSD rallied from 1.1855 to 1.1850, USDJPY dipped to 113.36 from 113.55, while USDCAD plunged from just over 1.2800 to 1.2720 lows following the warmer Canada CPI, and much stronger retail sales. The pairing has now traded under both its 200, 20 and 50-day moving averages, with the latter, at 1.2750, now reverting to resistance.

The 20k U.S. initial claims pop to 245k in the BLS survey week largely reversed the prior 27k four-week string of declines to a super-lean 225k that nearly brought us back to the 44-year low of 223k in mid-October.  U.S. Chicago Fed National Activity index fell to 0.15 in November after rising to 0.76 in October .The slip in the index suggests some moderation in economic activity.

Canada’s CPI surged to a 2.1% pace in November from the 1.4% growth rate (y/y, nsa) in October, leaving a faster than expected growth rate. The dramatic improvement was due to a difficult comparison with a lean November of 2016 index level. Additionally, Canada retail sales surged 1.5% in October after a revised 0.2% rise in September sales values (was +0.1%). A 3.9% run-up in sales at new car dealers drove total sales growth. Total sales volumes (as opposed to the dollar value of those sales) jumped 1.4%, providing strong support to our 0.2% m/m estimate for October GDP. The monthly projection is consistent with a 2.6% gain in real GDP growth (q/q, saar) during Q4. The BoC expects a 2.5% pace. Hence, while the jump in retail sales during October is surprisingly strong, it merely supports the BoC broader growth projections, as opposed to boosting upside risk around those estimates.

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Andria Pichidi

Market Analyst


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