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Weak North America Data

Market Analysis


The dollar fell following the personal income, consumption and chain price figures, which were generally light of expectations. EURUSD rallied to four-session highs of 1.1832, up from under 1.1810, as USDJPY slipped to 112.29 from over 112.55, while USDCAD slipped to 1.2477 from  1.2420. There had been some talk in the market that month/quarter-end position re-balancing would kick off after the data, which may be related to the sharp dollar reaction.

U.S. personal income rose 0.2% in August, with spending up 0.1%. The 0.4% income gain from July was revised down to 0.3% after an unchanged June reading. The 0.3% increase in PCE was not revised though June’s 0.2% was bumped down to 0.1%. Compensation inched up 0.1% versus 0.5% previously. Wages and salaries were flat from 0.5% previously. Disposable income was up 0.1% versus 0.2%. The savings rate was steady at 3.6%. The PCE chain price index edged up 0.2% in August from 0.1%, with the 12-month rate holding at 1.4% y/y. The core rate was also 0.1% higher last month versus 0.1%, with the 12-month slipping to 1.3% y/y from 1.4% y/y. The data are on the light side and should further a bullish curve flatterer today, amid month- and quarter-end flows.

Canada GDP was flat in July after an unrevised 0.3% gain in June. The lack of change undershot expectations,  although the flat reading for July is not a shock as the risk was tilted to the downside with this report. GDP had expanded in the previous eight months, leaving a robust growth pace in the first half of this year. This report is consistent with the widely expected moderation in growth during the second half of this year.

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Andria Pichidi

Market Analyst


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