Highlights November 16, 2022 / 08:48 pm UTC

US North American Summary and Highlights 16 Nov

By Dave Sloan


The USD weakened in the European morning but saw some recovery in North America assisted by stronger than expected US retail sales, though other US data was quite weak and the USD recovery faded. 

North American session

The USD was modestly firmer in the US session, helped by a stronger than expected US retail sales number for October. USD/JPY however failed to sustain a move above 140 and EUR/USD recovered to 1.04 after slipping to near 1.0330. UST yields pushed lower, particularly at the long end. Fed hawk Waller signalled that he was open to a 50bps December move.

Retail sales rose by 1.3% overall and ex auto, ex-auto sales matching the gain in autos the main surprise, though this was assisted by higher gasoline prices. Ex-auto and gasoline a healthy 0.7% increase was seen, with moderate upward back revisions. However, October industrial production with a 0.1% decline was on the weak side of expectations as was a 0.1% increase in manufacturing. Downward revisions to September data added to the negative message. November’s NAHB homebuilders’ survey also saw increased weakness, falling to 33 from 38.

Canadian CPI was unchanged at 6.9% yr/yr in line with consensus but the core rates rise. There was little CAD reaction however, with the ex food and energy rate subdued on the month with a rise of 0.2%. USD/CAD gains came close to 1.3350.

Europe session

The USD weakened steadily through the European morning session, losing around 0.5% across the board, although the JPY slightly underperformed. There was no obvious trigger for the USD weakness, but the market may have perceived less need for a safe haven premium now that it seems to be believed that he missile that hit Poland was an accidental strike from Ukraine. The USD remains within recent ranges, but towards the bottom end. 

The UK CPI data was stronger than expected in October, with a larger contribution from energy prices than expected as the new energy price cap was implemented. CPI headline rose 2% on the month and 11.1% y/y, but the core was also stronger than expected at 0.7% m/m and 6.5% y/y, unchanged from September. However, EUR/GBP actually rose on the data, reaching a high of 0.8775 before dropping back to just above opening levels near 0.8740. This decline on stronger than expected CPI data echoes the change in direction of the reaction to inflation data seen in Norway and Sweden in the last week. UK PPI data was also stronger than expected, reaching 19.2% y/y for the input side and 14.8% y/y on the output side, but both still declines relative to September on a y/y basis. 

4Cast Ltd. and all of its affiliates (Continuum Economics) do not conduct “investment research” as defined in the FCA Conduct of Business Sourcebook (COBS) section 12 nor do they provide “advice about securities” as defined in the Regulation of Investment Advisors by the U.S. SEC. Continuum Economics is not regulated by the SEC or by the FCA or by any other regulatory body. This research report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Nonetheless, Continuum Economics has an internal policy that prohibits “front-running” and that is designed to minimize the risk of receiving or misusing confidential or potentially material non-public information. The views and conclusions expressed here may be changed without notice. Continuum Economics, its partners and employees make no representation about the completeness or accuracy of the data, calculations, information or opinions contained in this report. This report may not be copied, redistributed or reproduced in part or whole without Continuum Economics’s express permission. Information contained in this report or relied upon in its construction may previously have been disclosed under a consulting agreement with one or more clients. The prices of securities referred to in the report may rise or fall and past performance and forecasts should not be treated as a reliable indicator of future performance or results. This report is not directed to you if Continuum Economics is barred from doing so in your jurisdiction. Nor is it an offer or solicitation to buy or sell securities or to enter into any investment transaction or use any investment service.
Analyst Declaration
I, Dave Sloan, the lead analyst declare that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further declare that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.