Sensitive Concerns as a Trader after the Gradual Liberalization of the Pandemic

Summary:

After the release of '20 measures to further optimize epidemic prevention and control work', places around China relax the pandemic control in late November. Many experts claimed that COVID-19 is weaker than the flu, making Chinese people ecstatic, as 3 years of the pandemic have finally seen a breakthrough. But as traders, suspicion, and preparation for the worst are necessary. It is questionable whether the virus has become weaker, or just the economy fails to sustain itself.

The Economy Has Reached an Unbearable Situation

During 3 years of the pandemic, people may support the 'Zero-COVID' policy at the beginning as they thought they could make up for the lost time after the quick ending of the pandemic. Now, many people decide to slack off, and it become synonymous with the era of the pandemic, as the feeling of these years is a mixed bag of emotions. Probably even it is liberalized slowly, many people can't raise too much passion, because the state of the economy has long been suppressed, and people slack off.

What about finance? Holding up is also difficult. According to many friends in the system, the three years is also the most difficult period for real estate as it is going to collapse. Real estate is the mother of the economic cycle, coupled with the difficult private enterprises, the financial system became weaker. Additionally, the bonus for those who work in the system dropped significantly, and even many people are obliged to work overtime without extra pay. Moreover, even though they work more, many of them must face mass blame, while more understanding is what they need.

Referring to statistics, the recent online hot terms, foreclosure, unemployment, and deadbeats, reflect these three years. In addition, the unemployed population in April 2020 was about 46 million, but there are more than 70 million now, plus fresh graduates, the total unemployed population may have reached 80 million. 2021 National Market Supervision and Administration Bureau illustrated that China's various types of markets canceled 13.238 million accounts, and it will be worse in 2022. The number of foreclosed houses also rises year after year. According to Ali foreclosed data: there are nearly 670,000 sets in 2020 and 2 million sets in 2021. As real estate decline significantly in 2022, it is estimated that the foreclosed data will be more horrible.

And the data of the deadbeats, that is, the number of dishonest executees has also increased to 7.85 million till November 25th. This number is almost the same as the population of a second-tier city, while Webank's data revealed some evidence. In 2021, Webank's net profit was 6.884 billion CNY, an increase of 39%, which is basically from the Wechat Loans. According to the customer stratification disclosed in Webank's annual report, 77% of users are engaged in the non-white collar service industry, 80% of users graduated from college and below, and the profit came from the middle- and low-income groups. As of the end of 2021, Webank had 321 million active individual customers, an increase of about 49 million people compared to the end of 2020, which is enough to see how much the middle and low groups are affected by the economic environment in these three years.

Concerns

The question arises, the economic difficulties are analyzed above, and it is now gradually liberalized, does the virus become weaker? I'm not an expert in this area, and I can't answer this question, but there are concerns about it. This is the trader's sensitivity and paranoia, and now the logic of the market is also more confusing, traders must plan for the worst case. Firstly, now after liberalization, the nucleic acid test is paid service, which means that basically everyone in the future will be infected once, or even many times. No one knows how fast the spread will be and how long it takes, but things will be chaotic. When we are the ones infected, we may not stay calm. It is a test for medical resources as well, after all, everyone will spend money to go to the hospital for peace of mind. What about jobs? As the sample is mall now, if numerous positive cases appear, will there be an impact on the labor market? Or how big is the impact? Will the policy tighten again? If panic deteriorates, several capital markets will be volatile, and they will fall at the very beginning. A little preparation is necessary. Firstly, continue to observe the situation of the pandemic, and secondly, maintain a neutral strategy for trading.

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Cohen

Forex

USD: Recessionary fears should keep the dollar in demand

After a positioning-led rally in risk assets over the last six weeks, financial markets seem to be settling back into a macro-led environment where the 2023 global slowdown is front and centre. Brent crude is dipping sub $80/bbl despite the OPEC+ supply cut, bonds are rallying and equities are starting to hand back some of their impressive rally from October lows. Importantly, the US yield curve continues to deeply invert. The 2–10 year Treasury curve is now inverted by a staggering 82bp.

This is by far the best representation of the macro view that recessionary fears are building, yet the Fed has yet to cave in. We continue to see this as a positive environment for the dollar and a negative one for commodity and pro-cyclical currencies. DXY has found support under 105 and could well make a run to 107 ahead of next week's FOMC meeting, where we think it is too early for the Fed to signal the 'all-clear' on inflation with its influential Dot Plots.

The main threat to our bullish dollar view comes from the risk of any softer US November price data (PPI released tomorrow, CPI next Tuesday) or a more positive re-assessment of Chinese growth prospects on the back of relaxed Covid measures. However, poor Chinese trade data released overnight serves as a reminder that the export environment will remain exceptionally challenging for China into 2023.

The Bank of Canada (BoC) will announce monetary policy today. As discussed in our meeting preview, the consensus is split between a 25bp and 50bp hike, but we believe a half-point move looks more appropriate given strong economic activity and a very tight labour market. Still, we admit it is a very close call given that the expected economic slowdown and fragility of the Canadian housing market argue for a smaller rate increase. Markets are pricing in 35bp for this meeting, so slightly leaning in favour of a quarter-point hike: in our base-case 50bp scenario, the Canadian dollar should rally on the back of the hawkish surprise. However, we don't see the BoC impact on CAD to be very long-lasting, as external factors remain more important. A sustained recovery in CAD from these levels undoubtedly requires a rebound or at least a stabilisation in oil prices. Today, USD/CAD could trade back below 1.3600, but short-term upside risks remain high.

EUR: Sideshow

It has felt like EUR/USD trading has become more settled over the last week, yet one week and one month realised EUR/USD volatility are still above 13%. This could be a precursor to one of the main themes we outlined in our 2023 FX Outlook, one of less trends and more volatility in FX markets.

There is a case that last week's 1.0595 print was the corrective high in EUR/USD - we should know a lot more by next Wednesday evening after the FOMC meeting - and it will be interesting to see what the European Central Bank has to say on the 15th. Some are speculating that the current calm in European bond markets could prompt the ECB to be slightly more aggressive in its quantitative tightening plans - so let's see. We have a couple of ECB speakers today, Philip Lane at 0810CET, and Fabio Panetta at 1530CET, but neither looks likely to knock the market off its consensus of a 50bp hike next week. For today, EUR/USD could drift down to 1.0400 in quiet markets.

GBP: Mildly bearish

Trading conditions have certainly settled down for sterling where one-month traded volatility is pretty steady in the 12-13% area having traded above 20% in late September. It looks like the Gilt market has rallied enough for the time being, with spreads to German Bunds now starting to widen again. In other words, the fiscal rectitude rally has run its course and sterling will not find any more positives here.

If, as above, we are turning to a more macro-led trading environment, then sterling should underperform. A Fed staying hawkish into a recession should see equity markets come under renewed pressure. Typically, this is a negative environment for sterling, where the UK's large current account deficit is penalised. GBP/USD has turned from a strong resistance level at 1.23 and our bias into next week would be for a return to the 1.19 area.

CEE: NBP ending the tightening cycle

Top of today's agenda is the monetary policy meeting of the National Bank of Poland (NBP). After last week's surprisingly low inflation, it is hard to expect any outcome other than stable interest rates. Although we think the peak in inflation is still ahead and inflation will slow only very gradually next year, the prospect of a weak economic performance will prevail at the MPC and we expect the same story next year. However, for now, the bigger focus will be on tomorrow's press conference by Governor Adam Glapinski and any potential mention of interest rate cuts, which could be a red rag to a bull for the markets.

As we mentioned on Monday, the gap between the zloty and the interest rate differential is the largest in the region at the moment and together with EUR/USD heading lower, this is not good news for FX. EUR/PLN is thus vulnerable, especially to the upside in our view and we could see a move above the 4.720 level which was already tested on Monday.

On the EU/Hungary story, as expected yesterday's Ecofin meeting did not bring a resolution to the current saga. The Ecofin was due to discuss both the recovery funds to Hungary and the European Commission's proposal for sanctions under the rule of law mechanism. EU member states have requested a new assessment of Hungary from the EC given that the original version did not include the latest changes on the Hungarian side. According to reports, the new assessment is expected to be discussed at an additional Ecofin meeting on 12 December and formally approved on 19 December. On the one hand, the EU's timing problems play into Hungary's hands, as the rule-of-law procedure will end without sanctions if the European Council does not decide on the issue; on the other, the EU may block the disbursement of cohesion funds after that date. However, after yesterday, it seems that the situation will be tense until almost the final day of the year.

On the FX side, the Hungarian forint touched its weakest levels since mid-November yesterday, but the currency erased some of its losses after the Czech finance minister, who is leading the current negotiations, said he believes a deal will be reached in the coming days. Thus, positioning continues to clear and in our view, the trend is tilting more towards the negative side of this story now. Hence, tangible progress should bring a significant rally, while further negative news may result in only slight weakening. Nevertheless, for today we expect a partial calming of the situation after yesterday's headline storm and we expect the forint closer to 410 EUR/HUF.

Source: ING

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Samantha Luan

Commodity

Energy - China oil imports jump

Oil prices have come under further pressure as macro concerns continue to weigh on the demand outlook. ICE Brent settled below US$80/bbl for the first time since early January. The prompt timespread also came under pressure, falling into deeper contango. The weakness in the front end of the curve suggests an easing in supply concerns, at least in the spot market. The outlook for 2023 will be very dependent on how the demand story evolves. The 2023 supply picture is still challenging, with expectations of falling Russian supply and continued OPEC+ supply cuts. The US is also struggling to deliver the supply growth that many were expecting. The EIA released its latest Short Term Energy Outlook yesterday, where it is estimated that US crude oil supply will grow by a little over 460Mbbls/d in 2023 to average around 12.3MMbbls/d.

The latest trade data from China shows that crude oil imports in November grew 12% MoM to 11.42MMbbls/d. This is the strongest monthly imports we have seen from China since January. Stronger crude imports are likely a result of refiners looking to make use of the latest batch of export quotas for refined products, which were released earlier in the year. Due to the strong imports over the month, cumulative crude oil imports this year are now just 1.4% lower YoY.

There are reports that Russia is looking to impose a price floor for its crude oil in response to the G-7 price cap. It is understood that Russia could look to sell at a minimum fixed price or limit the discount that they would be willing to sell their crude. There is very little detail on the proposal or when it could be imposed, if at all.

The latest data from the API shows that US crude oil inventories fell by 6.43MMbbls over the last week. Whilst the crude draw is somewhat constructive, this was more than offset by sizeable builds on the product side. Gasoline and distillate fuel oil inventories grew by 5.93MMbbls and 3.55MMbbls respectively.

Metals – Zinc gains on renewed supply concerns

LME zinc rallied yesterday following renewed supply concerns and declining LME on-warrant stocks. The latest reports suggest that Nyrstar's Auby smelter in France would remain closed given the ongoing challenging market conditions. The smelter halted its operations in October for maintenance, however, the company said that the operations will remain shut "until further notice". Meanwhile, the latest data from LME shows that on-warrant stocks for zinc declined by 8.7kt to 22.3kt.

The latest trade numbers from China Customs show that imports for unwrought copper jumped 33.5% MoM and 5.8% YoY to 540kt in November. Cumulatively, imports rose 8.5% YoY to 5.4mt in the first eleven months of the year. Meanwhile, copper ore and concentrate imports rose 29% MoM and 10% YoY to a record high of 2.4mt last month. Overall, concentrate imports rose 8.6% YoY to 23.2mt from Jan'22-Nov'22. For ferrous metals, iron ore imports rose 4% MoM to 98.8mt in November. However, YTD imports are still 2.1% YoY to total 1,016mt.

Peru's latest official numbers show that copper output rose 8.3% YoY and 1.1% MoM to 232.5kt (highest monthly production so far this year) in October. The majority of the gains were driven by Las Bambas, Cerro Verde and Southern Peru Copper.

Agriculture – Chinese Soybean Imports Disappoint

Trade data from China Customs shows that soybean imports dropped 14% YoY to 7.35mt last month. Cumulatively, soybean imports have fallen 8.1% YoY to 80.5mt over the first eleven months of the year.

Weekly data from the European Commission shows that soft wheat shipments from the EU rose 3.5% YoY and reached 14.5mt as of 4 December, up from 14mt for the same period last year. Algeria, Morocco and Egypt were the top destinations for these shipments. Meanwhile, EU corn imports stand at 12.6mt, compared to 5.8mt last year.

Source: ING

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Devin

Central Bank

In the hazy outlook for all major central banks next year, the Bank of England's trajectory seems peculiarly uncertain as markets appear at loggerheads with BoE guidance and forecasters.

The Bank itself - announcing its most recent rate hike early last month - publicly pushed back against what it then saw as excessive market pricing for further UK rate rises next year.

And yet those same market prices have barely flinched since then - despite a brutal fiscal squeeze in the interim, a near 20% drop in crude oil prices and a near consensus among official forecasters the British economy is already in recession.

When the Bank delivered its biggest rate rise in more than 30 years to 3% on Nov. 3, markets were then pricing a peak "terminal rate" of some 4.75% next summer.

And as policymakers now prepare for another half point rise next week, that terminal rate - the one Governor Andrew Bailey so clearly objected to - is still only marginally lower at 4.60% next September.

What's more, based on that sort of pricing and prevailing energy futures, the independent Office for Budget Responsibility's model projects two solid years of outright UK consumer price deflation from the middle of 2024 onwards.

Even median peak rate forecasts for next year from Reuters polling are, at 4.25%, some 35 basis points below where markets still doggedly price it. Many major banks within that sample -including UK high-street clearer HSBC, Wells Fargo, Royal Bank of Canada and Julius Baer - still see the terminal rate as low as 3.75%, almost a full point below market pricing.

By contrast, the median forecast for a similar poll on the U.S. Federal Reserve is exactly where futures currently price the Fed's terminal rate next year - 5.0%. At 3.0%, it's slightly above market pricing for the European Central Bank.

So why has the Bank of England's explicit pushback and the prevailing economic forecasting not had any impact?

Part of the problem is the Bank's own policy making council may be split as many ways as private forecasts - pleading a lack of visibility on anything from geopolitics to energy prices, election politics to Brexit, or stickiness of domestic wages amid a winter of labour strikes. Terminal Confusion on BOE Rates_1

'A generous spin'?

Dovish BoE council members Silvana Tenreyro and Swati Dhingra both voted for smaller rate increases than the 75bp hike delivered last month and still feel recession changes the equation.

As recently as Nov. 11, Tenreyro reckoned enough was enough and the BoE should stop at 3.0% through next year to allow the lagged effects to kick in and then reduce them in 2024. "Too high a path for (the) Bank Rate therefore risks over-steering inflation below target in the medium term."

While less explicit on the precise rate, Dhingra echoed all that in interview this weekend and dismissed wage-price spiral fears. "A wage-price spiral would mean wages should be above inflation."

It's likely Bailey and his chief economist Huw Pill will prevail next week with a half point hike. But many analysts think there could still be calls for 75bps from hawks Catherine Mann, Dave Ramsden and Jonathan Haskel and as much as a four-way split in voting from the monetary policy committee.

HSBC doubled down on its 3.75% peak rate forecast on Tuesday, however.

"A generous spin would celebrate the lack of groupthink and note that with such an uncertain outlook, a wide range of views is understandable and perhaps healthy," wrote HSBC economists Elizabeth Martins and Simon Wells.

"But more critical observers might say it adds to questions about the BoE's willingness and ability to act decisively to address the current inflation challenge."

The flipside for many is that the sheer uncertainty sown by the botched mini-budget and bond market blowout in September has built in a greater uncertainty premium into UK markets - if not outright risk premium per se.

Any reversion of terminal rate pricing to consensus or below could see the pound wobble again. Implied volatility in sterling is almost half the peak of September, but remains historically higher at more than 10% and a full point above the euro/dollar equivalent.

What's more, a driving force behind many dovish assumptions on rates is the depth of brewing UK recession. But that's as clear as mud to date - with the gloom possibly overstated so far and UK economic surprise indices still at their most positive since April.

For think tanks such the National Institute of Economic and Social Research, the Bank simply won't get inflation back to 2% without pushing rates as high as 4.75%.

Deutsche Bank are almost as hawkish - seeing the terminal rate as high as 4.5% due what they see as overly negative BoE forecasts on growth and inflation.

But it also sees the risks with that as the bank seems determined to protest the markets.

"There is a premium in place especially with inflation continuing to outstrip market and Bank expectations," said Deutsche economist Sanjay Raja. "That said, we have been stressing downside risks to our terminal rate projection, given the constant dovish messaging from the MPC. So, there's something to watch here." Terminal Confusion on BOE Rates_4

Source: Reuters

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Cohen

Economic

Growth predictions for the global chemicals industry are subdued as businesses in many advanced economies face an economic downturn, reveals a report by trade credit insurer Atradius.

Industry Grapples with Inflation, Subdued Growth_1

Persistent inflation and aggressive interest rate rises are leading to a deterioration in demand, in particular from consumers, and from businesses in the automotive and construction industries, the report points out.

According to Atradius, although chemicals businesses in China are not facing the same levels of gas shortages that can be seen in Europe, many producers have had to deal with production pauses and supply chain interruptions due to ongoing local Covid-19 lockdowns. The U.S. chemicals sector currently outperforms most other regions, benefitting from access to cheap shale gas, although a difficult domestic market means growth forecasts are modest, the report reveals.

Short-term challenges

Shortage of gas/gas rationing: The chemical industry is very energy intensive and requires high levels of natural gas as feedstock. There is looming uncertainty about the war in Ukraine and its destabilising effect on energy supply, for Europe in particular. Major gas shortage or gas rationing measures would severely affect European chemical producers, Atradius notes.

Economic downturn in advanced economies: Persistent and broadening inflation pressures, and aggressive tightening from central banks in response, are increasingly weighing on the outlook for advanced economies. A persistent recession and ongoing high inflation could lead to sharply deteriorating chemicals demand from both consumers and key buyer industries such as automotive and construction, it reports.

Mid-and long-term outlook: opportunities and challenge

Regional cost competiveness: The U.S. shale gas boom has restructured the landscape of the global chemical industry, particularly for basic chemicals. The U.S. chemical industry has a feedstock cost advantage due to low and more stable gas prices, attracting larger investments. Other regions, in particular Europe, are facing a long-term competitive disadvantage, says the report.

Rising middle class in emerging markets: Rapid urbanization and increasing household purchasing power of the middle class in emerging markets should boost demand for soaps and detergents products.

Energy transition and sustainability concerns: This will create challenges and opportunities for chemical business as companies face tighter regulatory directives and changing customer preferences. There is growing demand for 'green' and ethical products. This includes consumers asking where ingredients come from and assessing environmental impacts. Companies are facing major investments in decarbonisation and optimisation of their carbon footprint. Pressure from various stakeholder groups is increasing, and ESG performance is expected to be benchmarked as highly as cost and other productivity metrics, the report concudes.

Source: Trade Arabia

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Alex

Economic

This was supposed to be the comeback year for the world economy following the Covid pandemic.

Instead, 2022 was marked by a new war, record inflation and climate-linked disasters. It was a "polycrisis" year, a term popularised by historian Adam Tooze.

Get ready for more gloom in 2023.

"The number of crises has increased since the start of the century," said Roel Beetsma, professor of macroeconomics at the University of Amsterdam

"Since World War Two we have never seen such a complicated situation," he told AFP.

After the Covid-induced economic crisis of 2020, consumer prices began to rise in 2021 as countries emerged from lockdowns or other restrictions.

Central bankers insisted that high inflation would only be temporary as economies returned to normal. But Russia's invasion of Ukraine in late February sent energy and food prices soaring.

Many countries are now grappling with cost-of-living crises because wages are not keeping up with inflation, forcing households to make difficult choices in their spending.

"Everything has become more expensive, from cream to wine and electricity," said Nicole Eisermann from her stand at the Frankfurt Christmas market.

Central banks played catch-up. They started to raise interest rates this year in an effort to tame galloping inflation – at the risk of tipping countries into deep recessions, since higher borrowing costs mean slower economic activity.

Inflation has finally started to slow down in the U.S. and the eurozone.

Careful spending

Consumer prices in the Group of 20 developed and emerging nations are expected to reach 8% in the fourth quarter before falling to 5.5% next year, according to the Organisation for Economic Cooperation and Development.

The OECD encourages governments to provide aid to bring relief to households.

In the 27-nation European Union, €674 billion (US$704 billion) have been earmarked so far to shield consumers from high energy prices, according to the Bruegel think tank.

Germany, Europe's biggest economy and the most dependent on Russia's energy supplies, accounts for €264 billion of that total.

One in two Germans says they now only spend on essential items, according to a survey by EY consultancy.

"I am very careful but I have a lot of children and grandchildren," said Guenther Blum, a shopper at the Frankfurt Christmas market.

Rising interest rates have also hurt consumers and businesses, though U.S. Federal Reserve chairman Jerome Powell signalled last week that the pace of hikes could ease "as soon as" December.

He warned, however, that policy will probably have to remain tight for some time to restore price stability.

For her part, European Central Bank president Christine Lagarde sent a clear signal that the ECB would maintain its tightening policy, saying that eurozone inflation had yet to peak.

Economists expect Germany and another major eurozone economy, Italy, to fall into recession. Britain's economy is already shrinking. Rating agency S&P Global foresees stagnation for the eurozone in 2023.

But the International Monetary Fund still expects the world economy to expand in 2023, with a growth of 2.7%. The OECD is forecasting 2.2% growth.

The coronavirus pandemic, meanwhile, remains a wildcard for the global economy.

China's zero-Covid policy restrained growth in the world's second-biggest economy, but the authorities have started to relax restrictions following nationwide protests.

Climate costs

But for Beetsma, the biggest crisis is climate change, which is "happening in slow motion".

Natural and man-made catastrophes have caused US$268 billion in economic losses so far in 2022, according to reinsurance giant Swiss Re. Hurricane Ian alone cost an estimated insured loss of US$50-65 billion.

Floods in Pakistan resulted in US$30 billion in damage and economic loss this year.

Governments agreed at United Nations climate talks (COP27) in Egypt in November to create a fund to cover the losses suffered by vulnerable developing countries devastated by natural disasters.

But the COP27 summit ended without new commitments to phase out the use of fossil fuels, despite the need to cut greenhouse gas emissions and slow global warming.

"It is not an acute crisis but a very long-term crisis, protracted," Beetsma said. "If we don't do enough this will hit us on an unprecedented scale."

Source: AFP

To stay updated on all economic events of today, please check out our Economic calendar

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Devin

Economic

Stocks

Forex

Having seen another lacklustre and negative session for European and U.S. markets yesterday there appears very little interest to drive markets higher in the short term, as we look ahead to next week's central bank meetings from the Federal Reserve, as well as the European Central Bank and Bank of England.

While U.S. markets finished lower for the fourth day in succession oil prices also fell sharply over concerns that a stickier inflation outlook increases the prospect of a weaker economy heading into 2023.

Asia markets have been mixed today with the latest China trade data pointing to the damage the country's zero-Covid strategy is doing to its economy.

It doesn't seem that long ago that markets were getting all excited over the prospect that China was looking at options to reopen its economy, and while we are seeing a more pragmatic approach any rebound in economic activity is likely to be muted at best.

This is because with the onset of winter and China's own zero-covid strategy, and significant loosening is unlikely to happen much before the end of Q1 next year.

Recent economic numbers also point to a deep malaise, not only in the Chinese economy but also more globally.

Even as the Chinese economy has underperformed domestically, the exports part of the equation had until recent been performing well. Unfortunately, even here we are now starting to see weakness as global consumers cut back on higher prices, and a weaker economic outlook

The October China trade numbers showed the extent which China's zero covid policy is having on its economy as imports declined -0.7% showing once again that internal demand remains weak. What was especially surprising was a complete collapse in exports which had been expected to remain resilient after rising 4.5% in September.

In October exports declined -0.3%, which was the worst performance this year, as well as the worst performance in two and a half years.

The surprise slump also speaks to falling global demand for Chinese goods, as well as the continued disruption in supply chains caused by China's zero-covid curbs.

This effect was confirmed in today's November trade numbers with exports plunging -8.7%, as overseas demand slowed and shutdowns impacted economic output, while imports were even worse, plunging -10.6%. It's perhaps not surprising with numbers like this that the Chinese government realise that a change of tack is required when it comes to its covid policy.

Later today we have the latest rate decision from the Bank of Canada where expectations are for another 50bps rate hike, although one should be careful not to discount a lesser move of 25bps.

When they last met at the end of October, they surprised the markets with a 50bps rate hike, which was less than the 75bps that had originally been priced in. Could they surprise again with a lesser hike?

The surprise decision last month followed on from a similar move a few weeks earlier from the RBA who also decided on a lower-than-expected move with many asking the question as to what the common denominator around this more cautious approach was.

In the case of these two economies, one doesn't have to look to far, as concerns rise that too aggressive rate rises could do more harm than good, particularly when it comes to their housing markets.

The fragility of Canada's housing market is well known and has been showing signs of strain as mortgage demand starts to show signs of buckling under the strain of higher rates.

Inflation in Canada has started to come down, with October prices coming in unchanged at 6.9%, while further declines in oil prices should also translate into weaker numbers in the coming months.

That's not to say we won't see another 50bps rate hike today, although some are suggesting we might see a 25bps move. What we can be sure of is that the days of 75bps moves are probably in the rear-view mirror for now.

Jobs growth has continued to be resilient and wage growth is trending at 5.6%, with the Bank of Canada predicting inflation won't fall back to 3% by the end of next year.

EUR/USD – has continued to drift away from the 1.0600 area, potentially heading back towards the 1.0400 area and the 200-day SMA, which currently sits at the 1.0340/50 area.

GBP/USD – continues to drift back from the 1.2300 area, with the next key support at 1.2050 area. A move through the 1.2040 area could see further weakness towards the 1.1985 area on a move below the 200-day SMA.

EUR/GBP – seems that we might have found short term support just above the 200-day SMA and the 0.8540 area. Short squeeze could see a move back to the 0.8675 area. Below 0.8530 targets 0.8480.

USD/JPY – has continued to try and push higher, with a break above the 137.50 area targeting a move back to the 140.00 area. The rebound from below the 200-day SMA at 134.40 with a bullish daily candle, could signal a short-term base.