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USD/CAD Forecast Dec. 21-25 – Will Canadian GDP shake up Canadian dollar?

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In the US, headline and core inflation both rose slightly, from 0.0% to 0.2%. PPI was also weak, with the headlined and core releases coming in at a negligible 0.1%. Unemployment claims surged to 853 thousand last week, up from 712 thousand. This points to weakness in the labor market, as the economy continues to struggle. The week wrapped up on a positive note, as UoM Consumer Sentiment improved to 81.4 in December, up from 77.0 beforehand.

US retail sales declined in November, pointing to weak consumer spending. The headline figure came at -1.1%, while core retail sales fell by 0.9%. US PMIs remained well into expansionary territory, with Manufacturing PMI coming in at 56.5 and Services PMI at 55.3. However, the Philly Fed Manufacturing Index slowed to 11.1, down from 26.3 beforehand.

The Federal Reserve maintained its asset purchase program at the current level of $80 billion/mth. In addition, the Fed provided additional guidance which can be viewed as a dovish signal. Unemployment claims were up sharply for a second straight week, rising to 885 thousand.

USD/CAD daily chart with support and resistance lines on it. Click to enlarge:

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