The EUR certainly hogged most of the headline last week. It seems investors appear most bullish on the USD and JPY and overwhelmingly bearish on the EUR and AUD. US data continues to pleasantly surprise even with the Euro-zone believed to be entering or has entered its own recession. The FOMC meeting delivered no surprises. As expected, they kept policy unchanged with no mention of new communications strategies, discount rate cuts or of QE3. It was noted that key sections of the FOMC policy statement were identical to the statement issued on 2 November. With Europe under so much pressure itÃ¢â‚¬â„¢s now a guessing game Ã¢â‚¬Å“whenÃ¢â‚¬Â QE3 is required!
Below are some highlights of last week:
- USD: US retail sales disappointed. Sales rose +0.2% in November, compared with the +0.6% expected. Ex-autos, sales rallied +0.2% versus +0.5%. Despite the previous months being revised a tad higher the overall print was a disappointment.
- USD: The FOMC meeting delivered no surprises. As expected, they kept policy unchanged with no mention of new communications strategies, discount rate cuts or of QE3. It was noted that key sections of the FOMC policy statement were identical to the statement issued on 2 November. With Europe under so much pressure itÃ¢â‚¬â„¢s now a guessing game Ã¢â‚¬Å“whenÃ¢â‚¬Â QE3 is required!
- US: On Thursday, PPI, Empire State manufacturing and initial weekly job claims offered real encouragement on the health of the US economy.
- US: Jobless claims continue to trend lower (initial +366k, continuing claims +3.603m) and reinforce the recent generally positive tone to US data. The market remains weary that firings maybe ebbing, or is it because hiring is about to accelerate? Initial claims were at this level three and a half years-ago.
- US: Empire Manufacturing surprised higher and the details were firmer. New orders resumed growth this month; however, itÃ¢â‚¬â„¢s too early to call this a Ã¢â‚¬Å“newÃ¢â‚¬Â trend. The unfilled order backlog continues to get worked off and the reason why shipments are gaining.
- US: Wholesale prices rose slightly in November amid higher food costs, but the underlying rate of increase in PPI remained tame, indicating little inflationary pressure. PPI rose a seasonally adjusted +0.3%.
- US: Philly Manufacturing (10.3 vs. 3.6) continued to expand this month. In the details, employment stayed positive, but slowed a tad m/m. However, there were big gains in prices received, similar to the Empire report. Ã¢â‚¬Å“Optimism about the future is on the riseÃ¢â‚¬Â.
- CAD: Canadian Capacity accelerated (81.3 vs. 79.9) to its highest level in four-years. Capacity use was closed off faster than expected in Q3 and the prior quarter was revised higher. Canada is still operating at a lower rate than its peak in 2000 (87%). Despite this, the BoC has been clear that a move toward Ã¢â‚¬Å“neutralizing rates will lag behind closing off spare capacity in part given global risks affecting the 2012 outlookÃ¢â‚¬Â.
- USD: Consumer prices held flat in November (+0.0% vs. -0.1%) as a drop in energy costs offsets a slight rise in food prices and other items, underscoring weak demand.
- CAD: Overseas interest in Canadian assets dropped to +c$2.03b vs. +c$7.35b last.
- CAD: New Job insurance claims rose +4.2% in October, although long term jobless benefit claimants fell -1% in October and -20.3% on the year.