Improved Risk Appetite Pressures Greenback

Financial and Economic News and Comments

US & Canada

• Canada's seasonally adjusted housing starts advanced a more-than-expected 5.9% m/m in December, the third monthly gain, to a 174,500 annualized rate, the highest level in 14 months, from an upwardly revised 164,800 pace in November, according to figures from Canada Mortgage and Housing Corporation. The December advance was led by rises in both single and multiple starts. December housing starts increased 1.3% y/y.
• Canadian seasonally adjusted building permits fell a more-than-expected 4.6% m/m in November, the first fall in four months, to C$5.94 billon ($5.75 billion), after an upwardly revised 20.0% m/m jump to a 13-month high in October, according to data from Statistics Canada. The November fall was led by a 21.9% m/m drop in nonresidential permits to C$2.14 billion. November building permits rose 23.1% y/y.

• According to the business outlook survey released by the Bank of Canada, Canadian businesses reported near-record optimism about their future sales. The senior loan officer survey showed credit conditions eased for the first time since Q2 2007.
• Federal Reserve Bank of Atlanta President Dennis Lockhart said the US economic recovery will be slow and the banking system is still weakened, warranting low interest rates until the economy shows "momentum."

Europe

• According to a survey by the Confederation of British Industry, a balance of 13% of UK financial-services companies expects a reduction in business volumes in Q1 2010, the most negative expectation since December 2008.
• Switzerland's real retail sales decreased 1.7% m/m sa in November and grew 0.6% y/y nsa, data from the Federal Statistical Office showed, while nominal retail sales declined 1.2% m/m sa and increased 0.2% y/y nsa.

Asia-Pacific

• China's exports rose 17.7% y/y in December, the first gain in 14 months, to $130.7 billion, the fourth-largest on record, while imports surged a record 55.9% y/y to $112.3 billion, trade data from the Customs Bureau showed, leaving an $18.4 billion trade surplus. FX Strategy

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