Market Wrap – Canadian CPI and Consumer Confidence

The Canadian dollar rose during the US trading session against the US dollar after Canadian CPI weakened slightly and oil prices rose sharply intraday, with WTI gaining over 2.5%.

Part of the move higher in oil prices today came from the release of US weekly EIA oil inventories data which showed -5894K vs -1657K expected. Although most of the gains came from overall market positivity.

The report highlighted that he US has done a great job ramping up product supplies to stop any problematic winter shortage, which many had predicted.

Data showed that Canada’s annual inflation rate was at 6.8% in November of 2022, easing slightly from the 6.9% in the prior month but above market expectations of 6.7%. Still, the result marked the slowest pace of price growth since April.

Consumer costs rose at a slower pace for transportation (8.5% vs 9.5% in October), largely due to an eased advance in gasoline prices (13.7% vs 17.8%) as the reopening of refineries in the western United States drove fuel prices in British Columbia and Alberta to ease.

On a monthly basis, Canadian consumer prices rose by 0.1% in November, slowing from a 0.7% gain in the prior month. The USDCAD pair fell towards the 1.3600 support level.

The other market mover during the US session was the release of the closely watched consumer confidence report from the world’s largest economy.

US consumer confidence rebounded in December as inflation retreated and the labour market remained strong, but fears of a recession next year persisted, a survey showed on Wednesday.

The Conference Board said its consumer confidence index increased to 108.3 this month from 101.4 in November. Economists polled by Reuters had forecast the index at 101.0. The survey places more emphasis on the labour market, which remains tight.

And on a lesser note, US November existing home sales this afternoon showed 4.09m vs 4.20m which was expected. The Sales change was -7.7% m/m vs -5.4% expected.

Prices were +3.7% y/y to median $370,700. The market expected to see to see existing home sales struggle with rates high, but turnover is now just a fraction above the pandemic lows and the worst levels 2011.