CANADA DATA: Dec CPI Preview: Analysts Eye Divergent Energy, Food Dynamics (3/3)

• RES 4: 158.87 High Jan 10 and a key resistance
• RES 3: 158.29 2.618 projection of the Sep 17 - 26 - Oct 1 price swing
• RES 2: 158.00 Round number resistance 
• RES 1: 156.95/157.89 High Dec 9 / High Nov 20 and bull trigger 
• PRICE: 155.50 @ 16:33 GMT Dec 17
• SUP 1: 154.03 50-day EMA
• SUP 2: 153.62 Low Nov 14  
• SUP 3: 152.82 Low Nov 7 
• SUP 4: 151.54 Low Oct 29 

The latest pullback in USDJPY appears corrective. The trend condition remains bullish and this is highlighted by moving average studies that are in a bull-mode position. Support to watch lies at 154.03, the 50-day EMA. A clear breach of this average would undermine the bull theme and signal scope for a deeper corrective pullback. For bulls, a resumption of gains would open 158.00. 

• Stocks extend lows late Wednesday - the Nasdaq leading the decline as longs took profits ahead of the Christmas & New Years holidays. Currently, the DJIA trades down 153.34 points (-0.32%) at 47956.34, S&P E-Mini Futures down 65.75 points (-0.96%) at 6791, Nasdaq down 339.6 points (-1.5%) at 22771.63.
• Information Technology, Communication Services and Industrials sector shares continued to lead declines in the second half: Lam Research -5.10%, Oracle -5.04%, Broadcom -4.95%, Advanced Micro Devices -4.86%, Super Micro Computer -4.71%, Palantir Technologies -4.64%, Western Digital -4.51% and Dell Technologies -4.27%.
  • Merger/acquisitions continued to make headlines as Paramount Skydance trade down -4.08% after Jared Kushner's private equity firm pulled out of the hostile takeover bid for Warner Brothers, the latter also down 2.04%. Warner executives implored investors to reject the $108B Paramount bid, calling it "illusory" in favor of Netflix's superior offer.
  • GE Vernova -8.80%, Quanta Services -5.55%, EMCOR Group -4.84%, Generac Holdings -4.78%, Caterpillar -4.77% and Eaton Corp -4.68% weighed on the Industrials sector.
• On the positive side, Energy and Consumer Staples sector shares outperformed in the first half:
  • Texas Pacific Land +6.05% after signing an agreement with Bolt Data to build data centers, followed by: ConocoPhillips +3.96%, Devon Energy +3.85%, Occidental Petroleum +3.37%, Targa Resources +2.60% and Diamondback Energy +1.94%.
  • Meanwhile, General Mills +2.87%, Church & Dwight Co +2.64%, Kroger +2.38%, Clorox +1.99%, Procter & Gamble +1.88% and Hormel Foods +1.48% buoyed the Consumer Staples sector in the first half.

• The Eurozone unemployment rate was higher than expected in October at 6.4% in the single monthly update since the October meeting, unchanged after an upward revised 6.4% September (initially 6.3%).
• Revisions have been a theme over the past year, and generally to the upside, with this year’s low currently seen at 6.3% in multiple months vs an initially reported 6.1% in February for example.
• A 6.4% rate is still clearly historically low however, up from the series low of 6.2% in Nov 2024 before broadly moving sideways since then.
• The unemployment rate for those aged 25 years and above tells a broadly similar story at 5.5% for a third consecutive month versus series lows of 5.4% through most of 2H24.
• Back to latest data, the level of unemployment was a little more encouraging as it decreased slightly by 13k after two monthly increases.

• Meanwhile, revisions to the ECB wage tracker, released as usual the Wednesday after the ECB decision, saw a marginal upward revision for negotiated wages ex one-off payments for 4Q25 from 3.13% to 3.15% Y/Y.
• New projections for 3Q26 point to this ex one-off payment metric easing to 2.37% Y/Y after a projected 2.49% Y/Y in 2Q26.
• The wage tracker has generally seen marginal upward revisions over time (note the case in the prior September update) although these projections should continue to give the ECB confidence that wage-driven inflationary pressures remain on a disinflationary trajectory.
• That was especially so after realized negotiated wages growth subsequently surprised lower in Q3 at 1.87% Y/Y vs consensus of 2.45%.
• However, this was more recently countered by the December national accounts update showing far stronger than expected compensation per employees growth of 4.0% Y/Y in Q3, unchanged from 4.0% in Q2 vs the ECB’s forecast of a moderation to 3.2%.