US data reports yesterday helped fuel pressure on the US rates and the USD to an extent, despite Q3 GDP getting a small upward revision. The markets were more focused on the downward revision to core PCE and weaker than expected inventory data which supports the outlook for slower growth in Q4.

The Beige Book also noted generally slower activity. Still, the USD maintained a somewhat consolidative stance, with its latest declines starting to look a little overdone. Indeed, the big dollar has recovered some ground overall so far today, reflecting modestly higher US Treasury yields and weaker Eurozone data.

That does not mean there is much scope for a significant USD recovery, however. Broader trends remain bearish and December is typically a weak month for the USD broadly (average return of around -0.9% in the December month over the last 25 years).

Supposedly USD-negative month-end rebalancing flows have yet to show up but US data reports this morning may refresh USD-bearishness. Data are expected to reflect a softening labor market (rising claims), slower spending and weaker core inflation via the PCE deflator (3.5% Y/Y expected versus 3.7% in September).

USD/CAD -The CAD is marginally softer on the session but is resisting the USD rebound better than most. Stocks are generally firmer on the day and crude oil prices are up on the back of reports suggesting that OPEC+ has reached a deal on production cuts. Canada gets an update on GDP this morning. Industry-level output for September is expected to come in flat. Q3 GDP is expected to gain a feeble 0.1% (SAAR) after falling 0.2% in Q2. Soft data will not help the CAD but most eyes will be on the US data reports at 8.30ET and it may all be a bit of awash for the CAD ahead of tomorrow’s jobs data.

EUR/USD - EUR losses have picked up through the European session, reflecting a run of generally soft data—Spanish and French GDP, German jobs and lower than forecast Eurozone CPI for November. Preliminary inflation data shows a fall of 0.5% M/M and a drop in the Y/Y clip to 2.4% (down from 2.9%). Core price growth slowed to 3.6% (from 4.2%). EZ/US 2Y spreads have edged a little wider but market pricing for a 25bps ECB cut as soon as April looks premature; core inflation remains elevated and headline prices may rebound in the next few months. Policymakers will push back on the idea of earlier rate cuts.

GBP/USD -Sterling is softer, in line with the generally weaker tone of the majors on the day. UK firms expect prices to rise 4.4% in the year ahead, according to the BoE/ Decision Maker Panel survey. That’s down a little from 4.6% in the October survey.