North American Summary and Highlights 16 January

North American session

December US retail sales with a 0.4% increase were on the low side of expectations while initial claims bounced to 217k from 203k. However, January’s Philly Fed manufacturing index surged to a very strong 44.3 from -10.9 and there was little reaction to the data. The USD did slip on dovish comments from Fed’s Waller, who expressed optimism on inflation and saw 3-4 easings this year as possible. USD/JPY fell to 155.20 from above 156 while EUR/USD saw highs above 1.03 before correcting to near the figure and EUR/GBP corrected lower to around .8420. 

USD/CAD was an exception to the softer USD picture, touching 1.44 both before and after BoC’s Gravelle stated that QT would end in the first half of 2025. AUD/USD and AUD/CAD saw only marginal gains. 

European morning session

The JPY and CHF made some gains through the European morning, but the USD was otherwise little changed. GBP was the worst performer, edging slightly lower after weaker than expected November GDP data. This saw a 0.1% gain on the month, following 0.1% declines in September and October, and the underlying trend now appears to be flat, with private sector GDP negative. EUR/GBP gained on the news, but only around 10 pips, and at 0.8430 remains well below Wednesday’s highs. USD/JPY dropped around half a figure to 155.70, while EUR/CHF slipped 15 pips to 0.9375. These gains in the safe havens came even though equity markets were generally firm.