NY Open: Twenty pounds of headlines
Markets started the day in a confusion of incoming news as ECB chatter met with trade talk updates and US macro data. EURUSD took it on the chin and dropped from 1.1270 to 1.1235.
Summary: A sharper-than-expected downtown in Canadian Retail Sales hit the loonie where it hurts today, sending USDCAD to the 1.3019 area.
Shoppers weren’t shopping, and inflation wasn’t inflating. That sums up this morning Canadian Retail Sales and CPI reports and explains the surge in USDCAD from 1.3015 to 1.3019. The data was expected to be slightly weaker than last month’s results, but today’s numbers were well beyond the most pessimistic forecasts; August Retail Sales fell 0.1% (forecast 0.3%) and September CPI fell 0.4%. (forecast 0.0%)
Nevertheless, Canada’s 2.2% annual rate of inflation is still above the Bank of Canada target, and the BoC will still raise interest rates by 0.25% next Thursday.