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USD Strength Stalls; CAD Benefits from EU Trade Deal

Published February 16, 2017
  • The US dollar ended its 11-day streak of consistent gains on Thursday morning despite very positive inflation data and hawkish comments from Fed officials
  • US dollar buyers aren’t entirely convinced by recent data…
  • …Retail sales were strong but price increases were mostly buoyed by an increase of gas prices and inflation was strong but American average hourly earnings remain weak
  • This morning did, however, offer even more positive US data – US Building Permits and Housing Starts showed higher readings while unemployment claims were less than expected
  • The Philly Fed Manufacturing Index sentiment fared much better than expected, representing the highest reading for this index since 1984
  • Fed Vice Chairman Stanley Fischer said monetary policy is “in the land of accommodative” in regards to strengthening inflation and US labor market conditions and “if inflation is significantly above (target), you begin to worry and you begin to act”
  • The Canada-EU trade deal known as the “Comprehensive Economic and Trade Agreement” (CETA) passed in European parliament with 58 percent of members voting in favor of the pact
  • Canadian Prime Minister Justin Trudeau said CETA will become the “blueprint for all ambitious, future trade deals”; the EU is Canada’s 2nd largest trading partner after the United States

Chart (1) US Philadelphia Fed Manufacturing Index Since 2007