North American Summary and Highlights 11 December
Overview - The USD advanced in Europe led by USD/JPY on a BoJ report and reversed a dip on an as expected US CPI. USD/CAD slipped after the BoC eased by 50bps but suggested more cautious moves going forward.
North American session
US CPI data was as expected, with gains of 0.3% both overall and ex food and energy, but with the data seen as allowing a Fed easing next week UST yields dipped on the release, as did the USD. However. with UST yields rebounding, the USD recovered roughly back to where it was before the release, restoring its European gains, with USD/JPY near 152.50 and EUR/USD near 1.05.
The Bank of Canada eased by 50bps as expected but the statement removed a reference to expecting future rate cuts and Governor Macklem stated he anticipated a more gradual approach going forward. USD/CAD dipped to 1.4120 from near 1.4190, before recovering to around 1.4160.
European morning session
The USD was generally strong through the European morning, with USD/JPY moving sharply higher on a story that BoJ officials didn’t see little cost in waiting for the next rate hike, and see less risk of a weak JPY pushing up inflation. While the story also said that some might support a rate hike in December, USD/JPY rose more than a big figure to a high of 152.80.
The USD also made more modest gains elsewhere, with EUR/USD dropping 30 pips to 1.0495 and AUD/USD making a new low for the year at 0.6337. GBP was even weaker than the EUR, losing half a figure to 1.2720, but the CHF almost held its own against the USD, with EUR/CHF dropping 20 pips to 0.9280.