Price pressures in Canada weakened further as the annual rate of inflation slipped to 2.6% from 3.4% in September. In addition, the core measure for inflation continued to hold steady at 1.7% despite expectations for a 0.2% increase to 1.9%.
The Euro rallied more than 200 bps from yesterday’s lows despite a record low PMI reading, as a return of risk appetite sparked bullish price action. The Euro-Zone Purchases Manger’s composite index fell to 39.7 for November from 43.6 the month prior.
The US Dollar has been unable to break above key resistance against the Euro, British Pound, Australian Dollar, and Canadian Dollar. Given continued failure at resistance, we envision that the US Dollar could pull back through short-term currency trading against key forex counterparts.
The Bank of Japan kept interest rates at 0.30% as expected. The US Dollar gave back ground against the Euro and the British Pound reflecting an overnight recovery in risk appetite. The economic calendar offers few surprises in European trading hours, suggesting forex markets will continue to look to stock markets to set direction.