Daily Forex Fundamental Overview

Fundamental Analysis

EUR

“Aided by the European Central Bank's monetary stimulus measures and other efforts, inflation in the euro area is expected to return to the bank's objective of below but close to 2 percent by 2018-2019”.

- Mario Draghi, ECB

Consumer prices climbed in the Euro zone last month, official figures revealed on Wednesday. According to the Eurostat, the CPI came in at annualized 0.6% in November, up from 0.5% rise in October, the largest gain since May 2014. On a yearly basis, the core CPI came in at 0.8% unchanged from the prior month and matching analysts’ expectations. The slump in energy prices was fractionally higher at annual 1.1% compared with 0.9% previously. In the meantime, oil prices felt from the highest level in October, though stayed greater than the 7.3% decrease in November 2015. The yearly growth in food and beverages prices advanced to 0.7% from 0.4% the previous month. The so-called core CPI, which excludes food, energy, alcohol and tobacco, held steady at 0.3% on an annual basis in the same month, meanwhile the service sector CPI was unchanged with a slight step lower from 1.2% in November 2015. Although core inflation holds at 0.8%, price increases stays below the European Central Bank aim of 2% despite sustaining an accommodative monetary stimulus.

After the release, the Euro rose 0.14% against the US Dollar to trade at 1.0640, while Germany's DAX traded up 0.13%, France's CAC 40 advanced 0.24% and London’s FTSE 100 gained 0.16%.

USD

“With mortgage rates expected to rise into next year and put added strain on affordability, sales expansion will be contingent on more inventory coming onto the market and continued job gains”.

- Lawrence Yun , NAR

The number of homes that went under contract inched higher in October, a sign the housing market could be plateauing in the final months of the year. The National Association of Realtors reported that its pending home sales index, which tracks contract signings for previously owned homes, edged up 0.1% from a downwardly revised September reading to a seasonally adjusted 110.0. Sales typically close within a month or two of signing. It is essential to note that while demand for housing is high, supply still continues to weaken across much of the nation and is well below 2015 levels. While homebuilders ramped up production in October, overall construction is still well below historical norms. Builders cite the high costs of land, labor and regulation as barriers to increased volume.

In addition to that data showed that US crude oil inventories fell unexpectedly last month. In a report, Energy Information Administration said that US crude oil inventories fell to a seasonally adjusted annual rate of -0.884M, from -1.255M in the preceding month.

CAD

“I strongly believe that the continued expansion of our service sector is pointing the way toward full economic recovery and the return of sustained, natural growth”.

- Stephen Poloz, Bank of Canada Governor

Canada posted its strongest economic growth in more than 2 years in the third quarter, since a rebound in energy exports helped the economy to rebound strongly from a deep second-quarter contraction, which saw the economy recoil by a revised 1.3%. Meanwhile, the healthy rebound followed a second-quarter decline largely caused by oil-production shutdowns caused by Alberta wildfires and scheduled maintenance at oil sands facilities Real gross domestic product advanced 0.9% in the third quarter, following a 0.3% decline in the second quarter. Growth in final domestic demand slipped to 0.2%.In the meantime, exports rose 2.2%, making up some ground lost in the second quarter (-3.9%). Growth was driven by a 6.1% increase in the energy sector, following a 5.1% drop in the second quarter as a result of the Fort McMurray wildfires. Exports of goods jumped 2.3%, while services advanced 1.%.

The GDP reading was released ahead of the Bank of Canada's scheduled announcement next week on its trend-setting interest rate, which is widely expected to stay at 0.5%.

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