Tidying up for the holidays

3 minute read


A bouncy day for the USD took it back and forth across a half-cent range against the EUR as it reacted to stories of Chinese hacking and administration resignation as well as rethinking and rethinking again the implications for Thursday's Fed statement. The dollar came out of it with a better result than it had achieved on Wednesday but the sharp swings imply a lack of unanimity among investors as to where it might go next.

There was nothing among the US data to help. Initial jobless claims were fewer than forecast while continuing claims marginally exceeded forecast. The Philadelphia Fed's manufacturing survey told the same story as that told by the New York Fed two days earlier: it was three and a half points lower on the month at 9.4.


If investors are wary about the US economic outlook they are no more confident about the euro zone. This morning's data were limited to national readings from Germany, Italy and France: the only numbers for pan-Euroland today will be the European Commission's preliminary reading for consumer confidence. German consumer confidence was roughly unchanged; French consumer spending fell 0.3% in November; Italian business and consumer confidence both softened slightly.

The sense this morning in Europe was that market participants were tidying their books in readiness for the holidays. Against the USD the EUR lost 0.4%.


Yet again it was oil prices that had most influence on the Loonie. West Texas Intermediate (WTI) was only down by 1.5% but investors paid more attention to the direction than to the scale of the move. Oil is now priced 24% lower than at the beginning of January and the CAD is down by 7% and trading at its lowest level this year against the USD. On the day its loss is 0.5%.

The only Canadian ecostats on Thursday were the ADP employment change figure for November and October's wholesale sales. Both looked helpful. Sales beat forecast with a 1.0% increase and ADP reported a 39.1k rise in employment.


There were no surprises from the Bank of England on Thursday. The Monetary Policy Committee voted unanimously to hold the bank rate at 0.75% and the bank was cautious about the economic outlook. Data released this morning showed consumer confidence at a 12-month low of -14 and confirmed a quarterly expansion of 0.6% in Q3 for gross domestic product. Business investment declined by 1.1% during the quarter, a little less than forecast.

As politicians cleared their desks for the holidays the Brexit narrative was more muted than usual. A cross-party group is apparently setting up a motion which would, if passed, prevent a no-deal Brexit. Investors saw that as a good thing but it was not good enough to stop the GBP slipping by 0.2% against the USD.


Japan reported overnight on consumer prices. The headline rate of inflation came in at 0.8% for November, well down from the previous month's 1.4%. The core rate, ignoring the cost of food and energy was even lower at 0.3%. For the avoidance of doubt, those are annual, not monthly price changes. The numbers underlined the cautious tone of the Bank of Japan governor's statement the previous day.

They did not, however, deter investors. The JPY strengthened by 0.5% against the USD.

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