Friday, January 11, 2019
With an absence of domestic data to continue driving it higher, the loonie is down versus most currencies this morning. Oil prices are weak and the ongoing effects of rising interest rates on the oil industry are yet to be seen. Balancing solid industrial growth in exporting sectors of Canada versus oil industry protection will be Stephen Poloz’s conundrum as the year progresses. Markets will have to wait nearly a week for any more Canadian economic releases.
The USD is moving higher as inflation data was at expectation. Monthly benchmark consumer price index (CPI) declined 0.1% and core CPI grew at 0.2%. This US dollar strength is despite yesterday’s comments by Federal Reserve Vice Chairman Richard Clarida that the FOMC should be ready to fight economic headwinds with monetary policy. This suggests the Federal Reserve is priming markets for a less aggressive interest rate hiking schedule.
The EUR is mixed today as monthly Italian industrial production missed expectation at -1.6% versus consensus -0.3%. Recent Eurozone data has been weak overall but the market does not seem to be reflecting this. ECB meeting minutes released yesterday show Draghi and his team are aware of the data and do not seem to be worried.
Equities are down this morning: the Dow down 0.78%, the S&P down 0.66%, NASDAQ down 0.46% and the TSX down 0.09%. Crude Oil is down 1.03% this morning ($52.05) while Gold is down 0.27% ($1,290.90).
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