North American Summary and Highlights 17 December
Overview - The USD was little changed overall, though slipped versus GBP, CHF and JPY.
North American session
US retail sales were stronger than expected with a 0.7% rise overall, but were weaker than expected with gains of only 0.2% both ex autos and ex autos and gasoline. Industrial production was weaker than expected with a 0.1% decline. The USD was little changed overall but USD/JPY was dragged down by equities below 153.50 from near 154. EUR/USD kept close to 1.05 but EUR/GBP remained weaker near .8250 while EUR/CHF fell to near .9360.
Canadian CPI was slightly weaker than expected at 1.9% from 2.0% but the BoC’s core rates were on the firm side of consensus. USD/CAD saw little reaction to the data but later pushed above 1.43.
European morning session
GBP was stronger through the European morning session, rising on the back of stronger than expected UK labour market data. UK average earnings growth came in at 5.2% y/y in the 3 months to October, up from 4.4% in the previous 3 months and well above market expectations. The more up to date HMRC data on payrolled employees showed earnings growth at 6.3% y/y in November. However, the HMRC data continues to show a trend decline in employment, while the ONS data showed a 173k rise in employment in the 4 3 months to October. Nevertheless, the data was stronger than expected and pushed UK 2 year yields up 10bps, and EUR/GBP down around 30 pips to 0.8260 by the end of the morning.
EUR/USD was a little weaker on the morning, falling back a net 10 pips helped by a weaker than expected December IFO survey. The business climate index hit its lowest since the pandemic, driven by a decline in expectations. AUD, CAD, scandis and CHF also all fell back against the USD, but USD/JPY dropped around 25 pips to 153.75.