Morning Commentary & Currency Insights – January 12, 2018

Yesterday’s U.S. PPI data, which usually does not garner a great deal of attention, came in under economists consensus which caught the attention of market participants resulting in a weaker dollar across the board.  Euro has surged above 1.2100 and Sterling above 1.3600 while the remainder of G7 currency pairs had a more muted reaction.  Today’s more vaunted CPI number is likely to cause a stir given the FED’s concerns regarding soft inflation readings of late while retail sales data will be released concurrently.

USD/CAD remains on a 1.2500 handle having topped out at 1.2580 after NAFTA headlines spooked the market.  With more headlines filtering through the press in what appears to be a calculated campaign by the Canadian government to prepare the U.S. for upcoming talks, look for jittery trading conditions to remain.  Oil is trading just below $64 at a 3 year high but has lost its sheen with those playing the CAD correlation game as greater concerns emerge with the U.S. economy & NAFTA reaping the lion’s share of market attention.  Next week’s BoC rate decision still looms large but we have to get beyond today’s U.S. data first.