CANADA: BoC Presser Highlights: BoC Downplayed CPI Trim Strength

December's Dallas Fed Manufacturing Survey beat expectations with a headline reading of positive 3.4 vs -3.0 expected and -2.7 prior. That's the first positive reading in 32 months and the highest in 33, highlighted by a much stronger new orders reading (up 11 points to -0.9, pointing to unchanged demand from the prior month but still the best reading in 31 months).

• Other readings were mostly stronger vs November, including production, capacity utilization, shipments, expectations, though the employment subindices were a little softer.
• Notably though, there were much lower inflationary pressures evident in the survey, with raw materials prices falling 18 points to a 17-month low 10.5, with finished goods falling 12 points to -3.4, the first negative reading this year.
• Dallas is the 5th regional Fed to publish its December manufacturing report, and overall they were very mixed: Empire fell to 0.2 from 31.2 and Philly to -16.4 from -5.5, with Kansas City to -4 from -2, more than offsetting the improvements in Richmond (-10 from -14) and Dallas.
• That's not to mention the December MNI Chicago PMI which fell to 36.9 vs 40.2 prior, and the preliminary S&P Global PMI dipping to 48.3 from 49.7.
• As such despite an apparent improvement in some regional survey optimism immediately following the November elections (and again, this was quite mixed - the range of survey scores was the broadest since April 2020), the overall theme of the manufacturing sector remaining steady at a weak level generally remains intact.

• RES 4: 112-02   Low Oct 14
• RES 3: 111-20+ High 6 and the bull trigger   
• RES 2: 110-28   50-day EMA  
• RES 1: 110-03+ 20-day EMA
• PRICE:‌‌ 108-29 @ 16:16 GMT Dec 30
• SUP 1: 108-12  Low Dec 30
• SUP 2: 108-00   1.500 proj of the Oct 1 - 14 - 16 price swing   
• SUP 3: 107-27+ 1.0% 10-dma envelope
• SUP 4: 107-19+ 1.618 proj of the Oct 1 - 14 - 16 price swing

The trend condition in Treasury futures remains bearish despite the intraday rally into the Monday close. These short-term gains are considered corrective below the 110-03+ 20-day EMA. Last week’s sell-off reinforces the current bear cycle. The contract has traded through key short-term support and the bear trigger at 109-02+, the Nov 15 low. The breach confirms a resumption of the downtrend and opens 108+12+, a Fibonacci projection. 

• US TSY 26W AUCTION: NON-COMP BIDS $1.723 BLN FROM $72.000 BLN TOTAL