- Bank Of Japan hikes rates to 0.75%
- Global equity markets are ending the week quietly.
- US dollar opened with small gains after quiet session.
USDCAD open: 1.3794, overnight range 1.3770-1.3798, close 1.3780, WTI 56.02, Gold 4328.22
The Canadian dollar is adrift in a dull holiday market. The only excitement today may come from the release of Retail Sales, and New Housing Prices. Retail Sales, ex-autos are expected to be unchanged compared to the September result and should be of little interest to traders.
WTI oil prices see-sawed in a 55.62-56.25 range. Trump’s ongoing feud with Venezuela is providing a bit of support for prices however the topside is limited by oversupply fears.
US inflation appeared to cool in November, with headline CPI printing at 2.7% against expectations of 3.1%, while core CPI rose 2.6% versus a 3.0% forecast. However, since October data was missing entirely and the November figures were incomplete, markets are no better informed about the true state of US inflation than they were a month ago.
The Michigan Consumer Sentiment Index is on tap. Trump said that the “affordability crisis was “Democrat con job, despite the steep plunge in the index from 71.1 when he took office to 53.3 in November.
Asian equity markets wrapped up the week on a positive note. Japan’s Topix advanced 0.80%, Hong Kong’s Hang Seng climbed 0.76%, and Australia’s ASX 200 rose 0.39%.
As of 7:05 am, European equity markets were hovering around flat, while S&P 500 futures were up 0.12%. The US Dollar Index is 98.70,and the US 10 year Treasury yield stood at 4.195%.
EURUSD traded in a 1.1704 to 1.1763 range. The ECB left rates unchanged yesterday, as expected but raised both growth and inflation projections, prompting speculation among analysts that the easing cycle may be over.
GBPUSD traded in a narrow 1.3363 to 1.3388 range and went nowhere, with markets largely ignoring a modest improvement in GfK consumer confidence to -17 from -19 and unchanged headline Retail sales numbers. Yesterday, the Bank of England cut rates to 3.75% from 4.0%. The outlook for further easing remains murky, with policymakers clearly divided.
USDJPY traded in a 155.50 to 157.40 range and surged following the Bank of Japan decision. The BoJ raised its benchmark rate to 0.75% as expected, but the accompanying statement struck a dovish tone. Officials projected that consumer inflation will fall below 2.0% next year, leading analysts to push expectations for the next rate hike out by at least six months. Notably, the statement made no reference to currency weakness.
AUDUSD traded in a 0.6600 to 0.6623 range and drifted quietly as traders looked ahead to the holidays. AUDUSD continues to find support from this week’s consumer inflation expectations data.
