Going into the, US Session we saw the Canadian Manufacturing Sales reading for December come out 2.3% beating expectations by 1.1% points, the Christmas Season filtered its way into this report causing Sales to improve in Canada in the last Month of the year.
Furthermore, the US Inflation data (CPI y/y) came out 2.5% well over the forecast of 2.2% and the Core data at 2.3% beating expectations of 2.1%, the CPI m/m came out at 0.6% beating expectations by 0.3%, all of this data further strengthens the case for a sooner than expected rate hike. On Tuesday during the FED Chairman’s Semi-Annual Testimony on Monetary Policy before the Senate Banking Committee, Janet Yellen reiterated that “it would be too risky to not raise rates at an appropriate pace this year”, the Market interpreted this as concern for President Trumps Reflational Policies of Tax Cut, Deregulation and Infrastructural Spending, This further raised optimism for three possible rate hikes this year according to the FEDZ forecast for the FEDZ FUND RATE, the market saw the FED FUTURES FUND RATE rise up to 42% for a possible rate hike in March, up from 34% earlier on in the month, we will be looking at incoming data to predetermine how the FEDZ may react in March, in addition President Trump on Wednesday in a meeting with leaders in the Retail Sector further emphasized that he will visit the tax cut policy as soon as possible and that the Tax cut policy would cover both personal and Corporate taxes.
In Continuation, the US CRUDE OIL STOCKPILES (CRUDE OIL INVENTORIES) increased to 9.8M barrels for the week, we have being seeing an unusual increase in US Stock piles for the last 4 weeks all being in surplus, we believe the Companies think that Crude oil futures prices may continue to rise, therefore the increase in stock piles to mitigate against potential rising cost of crude oil futures prices. To wrap-up, in the early hours of the Asian session the AUSSIE released its Employment data, as expected the data beat expectations but more importantly we are seeing an increase in Full time Jobs this implies confidence in the recovery of the Australian Economy. Going forward we should see strength in this Economy.