Higher revisions in US GDP figures for Q321 was too backward-looking to support the USD much further, but stronger US consumer confidence was still a net positive for the US economy. The US calendar is jam-packed today, with the latest PCE and durable goods orders likely to get the most attention. Following the recent peak in the US CPI, the Fed has already become more hawkish, removing its temporary inflation assessment, speeding up its QE tapering process, and front-loading rate rise expectations for the coming year. The bar appears to be set quite high for any upward inflation surprise to boost the USD, as personal spending and income statistics may become more relevant in the future. In the end, the USD is on track to finish 2021 as the outperformer in the G10 FX.
The CAD remains one of the weaker currencies in the G10 FX sector in December, it is holding near its 2021 highs, just shy of 1.30. The CAD has yet to gain from a rise in energy costs, possibly due to the reinstatement of Covid limitations in several areas. Meanwhile, macroeconomic data from Canada continues to show strong results. Today's GDP statistics are expected to reflect the greatest monthly gain in seven months (0.8 percent MoM), while the November flash estimate suggests Q421 will continue to grow at a steady pace. This may not be enough to provide the CAD with a significant reprieve, as Canada's more advanced recovery calls for fresh CAD outperformance over the USD in 2022.
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