FX News Today
U.S. oil in Asian trade fell to its lowest since September 2003, below $28 a barrel. Crude Oil prices continue to drop as oversupply is seen as a driver for the recent low prices. Asian stock markets fell sharply overnight, led by hefty 3.71% declines in the Nikkei 225 and a 3.82% drop in the Hang Seng Index. This followed a new selling phase in oil markets.
The JPY has continued to gain strength and has been a currency over performer in recent trade as the fight to safety trade resumes in the wake of the troubled equity markets. At the time of writing, the JPY is trading higher against the USD by 1.14%.
Today, the economic calendar has some key data from the U.S. and Canada, US CPI, and the BoC rates decision are due later today. For the US, the CPI is expected to improve to 0.8% and for Canada, a rate cut is now partially priced in and the potential for the CAD to strengthen if BoC fails to deliver a rate cut remains an upside risk.
European markets are waiting for tomorrow’s ECB meeting; however, the European central bank is widely expected to keep policy unchanged. Traders will look to hear if Draghi delivers a dovish press conference that will keep the door open to further easing.
Main Macro Events Today
EUR German PPI inflation: Rose to -2.3% y/y in December, from -2.5% y/y in the previous month. This was in line with analyst forecast. The headline rate remains firmly in negative territory and even the ex-energy rate is negative at -0.6% y/y although slightly higher than the -0.7% y/y rate in November. All in all though no sign of a turnaround, especially as oil prices slumped since the end of last year and the data will only add to the arguments of the doves at the ECB for additional easing measures, even if Draghi is likely to take a wait and see stance for now.
USD U.S. CPI: December CPI data is out today and analyst expect the headline to remain unchanged (median unchanged) with the core measure up 0.2% (median 0.2%). This follows respective November figures of unchanged for the headline and 0.2% for the core. The continuation of declines in oil prices has weighed on recent price measures and will likely continue to do so in the CPI release.
CAD Canada Wholesale: Analyst expect wholesale shipments, due today, to rise 0.5% in November, breaking the string of monthly declines from July to October. Moreover, as gain for wholesale shipments and manufacturing shipments would be supportive of a bounce in November GDP following the flat reading in October and the 0.5% plunge in September.
Canada Manufacturing: Analyst expect shipments, due today, to rise 0.7% in November after the 1.1% drop in October. A 0.4% gain in export values provides a compelling reason to forecast a move higher in November manufacturing shipments. Notably, the gain in exports followed three straight declines (Sep, Oct, Nov) that correspond with the downtrend in manufacturing shipments.