Dollar remains generally firm in early US session after a mixed bag of economic data. Though again, the strength is mainly seen against Euro and Yen. ISM non-manufacturing index unexpectedly improved to 40.6 in Dec but is still deep in contraction region below 50. Employment component also improved slightly from 31.3 to 34.7 while price paid dropped slightly from 36.6 to 36.0 only. However, factory orders dropped much more than expected by -4.6% in Nov while pending home sales also dropped much more than expected by -4.0% in Nov. Dollar index reaches as high as 84.01 and is still firm for further rally to retest 88.46 high. Focus now turns to FOMC minutes of the Dec 15-16 meeting which should reveal more information on Fed's quantitative easing campaign.
Canadian dollar is lifted mildly by rebound in crude oil prices which breaches $50 level earlier today. Though momentum in the Loonie is limited as oil retreats in early US session. Canadian PPI dropped sharply by -2.6% mom in Nov, with yoy rate down from 9.5% to 5.9%.
Euro remains pressured across the board after release of lower than expected inflation reading fuels speculations of rate cut from ECB on Jan 15. Flash HICP estimate in Dec dropped more than expected from 2.1% to 1.6% yoy, versus consensus of 1.8%. This is the first time that inflation fell below ECB's 2% target since Aug 2007 and is the lowest rate in two years. Eurozone Services PMI for Dec is revised slightly higher to 42.1 but provides no support to the common currency.
On the other hand, Sterling is supported by unexpected improvement in Dec Services PMI from 40.1 to 40.2. Released earlier, Nationwide consumer confidence dropped to 47. Dec. Nationwide house price dropped more than expected by -2.5% mom, -15.9% yoy in Dec.