• Federal Reserve officials cautioned on Thursday that the fiscal and tax plans sketched out by the incoming Trump administration could trade a short-term economic boost for longer-run inflation and debt problems they might have to counteract. Fed regional bank presidents, in an array of appearances, agreed in principle that the policies President-elect Donald Trump is likely to pursue will increase economic growth – through direct spending, the consumption and investment spurred by tax cuts, and the boost to business from lighter regulation.
• Fed Chair Janet Yellen said the U.S. economy was doing “quite well” and didn’t face any serious obstacles in the short term, adding that she was worried about longer-term issues like widening income inequality and weak growth in labor productivity.
• Atlanta Federal Reserve President Dennis Lockhart, who retires at the end of next month, said that if inflation moves too quickly the Fed may be forced into “preemptive” rate increases.
• Chicago Federal Reserve President Charles Evans said that at this point the economy does not really need much short-term help. It needs longer term strategies to expand a labor force constrained by issues like population aging and lagging productivity.
• Philadelphia Federal Reserve Bank President Patrick Harker said while he had not yet changed his policy outlook based on anything Trump might do, as things stand “the economy is displaying considerable strength” without any extra government help.
• St. Louis Federal Reserve President James Bullard downplayed any immediate inflation concerns during remarks in New York. He said the impact of the tax, spending and other changes Trump might enact would become clear perhaps next year.
• Dallas Fed President Robert Kaplan, who also spoke on Thursday, said he was still in wait-and-see mode on the economic effect of many of Trump’s policies. This included the repeal of Obamacare, which Kaplan suggested could hurt consumers’ willingness to spend.
• The EUR/USD rose to 1.0684 on Thursday in wake of disappointment at President-elect Donald Trump’s failure to elaborate on fiscal stimulus plans during a news conference a day earlier.
• With U.S. markets closed for a holiday on Monday traders were unlikely to open fresh positions ahead of the long weekend, though U.S. data to be released later today (retail sales, PPI, business inventories, University of Michigan consumer confidence) could move the market.  The dollar can be sold further especially if December retail sales are worse than expected.
• We used the overnight corrective EUR/USD move to get long at 1.0620. The nearest resistance level is 1.0707 (38.2% retrace of the 1.1300 to 1.0340 fall). A break and daily close above this level will accelerate the upward move.

USD/CAD: Sell at 1.3205

• The CAD touched a near 3-month high against the USD on Thursday as oil prices rose and the greenback extended losses that began after U.S. President-elect Donald Trump’s news conference a day earlier.
• The USD/CAD broke an important trendline, which is a strong bearish signal for the coming days. The move was was stopped at 50% fibo of May-December rise.
• The price of oil, one of Canada’s major exports, rose on reports key OPEC members were cutting production as promised and on forecasts of strong demand growth in China. But a rise in oil prices does not explain the entirety of the Canadian dollar strength that we have seen so far this year.
• Gains for the loonie follow upbeat domestic data since the start of the year, including a surge in jobs in December and the first trade surplus in more than two years in November while a Bank of Canada survey pointed to improving business conditions.
• Statistics Canada showed yesterday that Canadian new housing prices rose 0.2% in November from October vs. market forecast for a 0.3% increase. The Ontario cities of London and Hamilton saw the largest gains – 1.3% and 0.7% respectively – with builders citing better market conditions and higher construction costs.
• We think that USD/CAD bearish move will be continued and are looking to get short on upticks. We have lowered our sell order to 1.3205 in both short- and long-term part of our portfolio.

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