North American Summary and Highlights 31 January

North American session

Data did not deliver much response. The US Employment Cost Index rose an as expected 0.9% in Q4. December’s personal income and spending report confirmed Q4 totals seen in the GDP release, though core PCE prices were soft before rounding at 0.156%, and that was later welcomed by Fed’s Goolsbee. November Canadian GDP was weaker than expected at -0.2%, but a preliminary estimate for a 0.2% increase was made for December. 

The USD saw some early losses, notably versus EUR, GBP and AUD as equites proved resilient to tariff worries. The USD then took a hit on a Reuters report that tariffs would be postposed to March1. USD/CAD, having earlier reached 1.4550 fell sharply below 1.44, while EUR/USD, which earlier had seen a low of 1.0360, hit a high of 1.0434. However, that move was reversed when the White House stated the tariffs would go into effect on February 1, and the USD moved back to near earlier highs.  USD/JPY saw fresh highs for the day above 155. Earlier equity strength was also erased. 

European morning session 

EUR/USD slipped lower through the European morning, reacting negatively to more weak Eurozone data. After opening near 1.04 it slipped to a low of 1.0365 after the French national and German state preliminary CPI data came in weaker than expected, pulling 2-year EUR yields down by 6bps. Earlier, German retail sales data was also weaker than expected at -1.6% m/m, helping set the more negative tone.   

USD/JPY was fairly steady, but GBP and the CHF edged lower with the EUR, although EUR/GBP and EUR/CHF were also down on the session. Scandis were steady against the EUR, but the AUD and CAD both weakened, broadly matching EUR weakness, although the CAD was firmer earlier in the session.