Wednesday December 7th, 2022

The US$ eases, oil prices lower, equity markets are down, while US yields are flat as China data increases recession fear. Equity markets and commodities came under selling pressure as Chinese trade data compounded fears about the health of the global economy. China’s exports & Imports shrank at their steepest paces in 2 ½ years in November on weak global & domestic demand and covid-led production disruptions put pressure on the world’s second-biggest economy. In focus today, US Nonfarm Productivity, EIA Crude Oil Stocks Change, Unit Labor Costs, ECB Panetta speech, CAD BoC Interest Rate Decision & Rate Statement. In other news. Democrats win outright Senate majority after Georgia victory. German police arrest 25 people suspected of plotting right wing coup to overthrow state. NATO chief Stoltenberg says conditions for peace in Ukraine ‘not there now’. China retreats from sweeping zero-covid polices as economic toll mounts. US banks warn of recession as inflation hurts consumers. In Currency markets. The US$ Index slips, commodity prices come under selling pressure pm recession fears. CNY firms on easing of covid restrictions, while ignoring slumping trade data. CNY firms 0.25% while Asian currencies are flat on average vs US$. Trading currencies are mixed with NOK, JPY, MXN & AUD down 0.25%, while CHF & SEK are flat, NZD & ZAR are up 0.15% vs US$.

Oil prices weaken further, falling close to 2022 lows pressured by recession fears, and easing fears that a western cap on Russian oil prices would significantly curb supply. C$ is down 2% vs US$ in December hitting its lowest level since Nov 4th on a combination of risk-off sentiment and weaker commodity prices. Today BoC rate decision is looking at its 7th consecutive rate hike with markets anticipating the bank will hike just 0.25% today. The BoC governor statement will be in focus for direction on the Canadian economy. Support holds at 1.3570 while resistance rises to 1.3750 (Nov 4th).

EURCAD rallies as commodity prices continues to put pressure on CAD which continues to underperform its G10 peers. Support rises to 1.4250 while resistance rises to 1.4400.

Euro retest’s 1.0500 as the US$ retreats amid mixed China news. Euro found support on domestic growth data and China easing more covid restrictions. German Industrial Production, EU GDP and Employment change all came in slightly better than expected helping the milder recession narrative. Focus shifts ECB Panetta speech and US data for intraday direction. Support holds at 1.0470 while resistance remains at 1.0600.

GBPEUR eases in early trading as a hawkish ECB continues to help support the Euro. Support lowers to 1.1500 (.8695) while resistance resets to 1.1650 (.8583).

GBP strengthens in early trading on the back of a weaker US$. The pound is benefiting from the weaker US$, while analysts are turning bearish on GBP looking for a retest of 1.1800 into Q1/23 on recession fears and growing energy concerns. Today saw Halifax House prices m/m & y/y both fall below expectations. Intraday US data will help provide intraday direction. Support resets to 1.2100, while resistance resets to 1.2200.