- Canada CPI inflation for November YoY 3.1% versus 2.9% estimate
- US housing starts for November 1.560M vs 1.360M estimate. Best since May.
- Richmond Fed Pres Barkin: Inflation remains a focus for the Fed
- RBNZ Gov. Orr: Inflation remains to high.
- Fed's Bostic: Still a ways to go on inflation even though Fed has made tremendous progress
- Bostic: There "is not going to be urgency" for Fed to back away from restrictive stance
- Atlanta Fed GDPNow growth estimate for Q4 rises to 2.7%
- Canada industrial product prices MoM for November -0.4% versus -0.6% estimate
- BOE's Breeden: Important for policy to be restrictive for an extended period
Markets:
- Gold up $13 to $2039
- WTI crude oil up $1.11 to $73.44
- US 10-year yields down 2.3 bps to 3.93%
- S&P 500 up 0.5% to 4817
- AUD leads, JPY lags
USD/JPY ran into sellers just below 145.00 in the squeeze higher after the BOJ held rates unchanged and didn't offer any hints about a move soon. That was after a confusing series of messages in the lead-up to the decision. The 250 pip move higher stalled and then started to give back some ground just as North American traders arrived and that continued into the European close in a decline to 143.50.
That pair fell even as the USD was weakening elsewhere. The euro took another look at 1.10 while cable rose briefly above 1.2750.
The commodity currencies got a lift early in North American trade, in part due to a hot Canadian CPI report. USD/CAD quickly fell 50 pips on the data and stayed at the lows near 1.3333 despite a few bounces. The moves in AUD and NZD were also helped by another day of positive risk appetite and new records in some US equity indices.
Adding to the mood was a strong report on US housing starts. US home builders have been one of the winners since the dip in interest rates and have quickly rallied to all-time highs. The risk is that housing and construction are a surprise tailwind in 2024 as the US struggles to improve home supply.
