Moneyway Analysts Report:
Today’s CPI numbers has basically wiped out any chance of an interest rate hike this year, or even the spring. October consumer price index edged up 0.1 percent on the month and was up 1.4 percent from a year ago as anticipated. The annual gain was a slowdown from September’s 1.6 percent increase, but should not surprise the Bank of Canada, which expects fourth quarter CPI to average 1.4 percent and not reach the 2 percent target before mid-2018.
The Canadian dollar responded in kind as it was up in early trading due to higher oil prices. Oil took back yesterday’s losses and some, West Texas Intermediate at this time is $56.34 USD a barrel, up 2.18%. Saudi Arabia announced that there would be further output cuts after its meeting with Russia on November 30th, erasing any doubts that Russia and Saudi Arabia were no longer in talking.
USDCAD 1.2760, 1.2738, 1.2728 1.2800, 1.2808, 1.2828
Katia Dmitrieva of Bloomberg Reports:
Even Real Estate Developers Can’t Afford Toronto’s Housing Market
The hottest housing market in the world is facing a reckoning.
Toronto-area land prices have gotten so high that developers are struggling to build new homes that people can afford. Buyers are no longer lining up, despite discounts and incentives.
The cost of land has nearly tripled in some areas the past five years, according to Altus Group Ltd. It now accounts for roughly half the price of a new home. In 2011, it was a little more than a third.
“It’s a real turn,” said Peter Comyns of PMA Brethour Realty Group. In June, it took Comyns just two days to find 200 buyers for yet-to-be-built homes in a Toronto suburb. Two weeks ago, 50 were available. His team sold about 12.
A convergence of factors — government rules aimed at reshaping Ontario’s housing market, tougher mortgage guidelines, a shortage of land — is pushing against the housing bubble in the Toronto area, where new-home prices have risen since 2009.
One result is pinched supply. About 2,600 new homes were available for purchase in the Toronto area at the end of September, close to a record low and down from about 15,000 a decade ago.
XE Market Analysts Report:
The dollar is lower on reports about the Trump administration having last month been served a subpoena from the special council Mueller requesting documents relating to Russia, according to the WSJ. Separately, the House Judiciary Committee sent a letter to the attorney of Jared Kushner, Trump’s son-in-law and senior advisor, asking for more information about a “Russian backdoor overture and dinner invite.” The narrow trade-weighted USD index (DXY) is presently showing a 0.3% loss, earlier logging a two-session low at 93.52. The buck has lost most ground to the yen, the forex market’s safe haven unit of choice now that the Swiss franc’s status as haven has largely been deconstructed. USD-JPY hit a one-month low of 112.39 during the Tokyo session, since settling around 112.50, which still leaves it with a net decline of 0.4%.
.EUR-USD turned lower after a brief foray back above the 1.1800 level, meeting good selling interest above here for a second consecutive day. Overall, there is a lack of strong directional leads. Focus turns to the passage of the Senate tax reform bill after the House passed its version. The data calendars are quiet today on both sides of the Atlantic. EUR-USD has near-term support 1.1755-60.
USD-JPY has declined for a fourth consecutive day, this time driven by a bout of general dollar selling during the Tokyo session in an interbank market running for stop loss levels. The pair logged a one-month low at 112.39. The price action affirms an evolving correction following a two-month rally phase from the early September low at 107.31, which capped out at 114.73 in early November. We anticipate further declines. Resistance is at 112.75, which was a former support level, and trend support now comes in at 112.16-17.
Sterling has been trading mixed in recent sessions. Forecast-beating retail sales data out of the UK yesterday gave the pound a leg higher earlier, along with affirmation from BoE governor Carney that more rate hikes will be seen if the economy develops along expected lines. though Brexit-related noise seems to have deterred follow-through buying. The Dutch parliament warned its government to start making serious contingency plans for a “no deal” Brexit, which is the latest sign of rising concerns about a lose-lose trade situation in a messy Brexit scenario. Goldman Sachs chief executive Blankfein also tweeted that “many” British CEOs wish for a confirming vote on the decision to leave the EU, to “make sure” that the consensus is still there — remarks that will doubtlessly prompt a stern rebuttal from Brexiteers as being from a “globalist” interest. Cable has settled around 1.3200 after lifting from levels around 1.3140-50 during the London AM session. The 1.3200-50, approximately the half way mark of a range that’s being in play for six weeks now. A series of daily lows that were seen in October between 1.3027 and 1.3039, mark a key support zone.
EUR-CHF clocked a 34-month high at 1.1723, subsequently settling back under 1.1700. With the Eurozone gathering growth momentum, and seeming to have conquered existential political threats, we continue to anticipate an eventual return to 1.2000, which is the former trading floor of the SNB.
USD-CAD has settled in the mid 1.2700s after logging a three-week low at 1.2665 last week, which reaffirmed an emergent downward trend. The pair’s two-month rally phase from sub-1.2100 levels looks to have stalled over the last week or so. BoC Governor Poloz last week reaffirmed guidance given last month by saying that “the economy is likely to require less monetary stimulus over time, we will be cautious in making future adjustments to our policy rate.” We project the next BoC rate hike to be in March, and expect USD-CAD to remain in a downward path for now. Resistance is at 1.2700-05, and support is at 1.2600-02.