Another light day of economic news in the FX market as price action in the majors reflects the consolidation of yesterday's break out move against the dollar. In Japan we are finally starting to see consistent consumer spending as Supermarket sales have registered their fourth consecutive monthly increase. If this months Household spending results confirm these figures, yen bulls will have a much stronger case for claiming that deflation that has plagued the Japanese economy for well over a decade may be finally over. 

In the Euro-zone Industrial New Orders jumped an impressive  4.9% versus 1.2% expected likely boosting the region's 4th quarter GDP.  The gains were no doubt driven by the persistently lower euro during the month of November which helped EZ's thriving export sector. Therein lies the dilemma. If the EUR/USD rises above the 1.2500 level, it will again curb export growth and may in turn slow the Eurozone economy overall. So a rising euro is a double edged sort for the region and may in fact restrain ECB policymakers from raising rates  much further for fear of damaging the still fragile recovery.

Finally, the trade of  the day my lie up North where Canada has just completed its parliamentary elections.  Though the headlines proclaim a conservative victory, the facts actually tell a much more muddled story. Stephen Harper, the 46-year-old Conservative leader, was only able to harness 36% of the vote falling far short of the majority necessary to form a functioning government  In fact left leaning NDP made dramatic gains and overall the center left pulled  52% of the vote not including the separatist Bloc Québécois which may yet swing either way. Bottom line, the governing coalition is far from clear and this uncertainty may weigh on the loonie until the market gets a better grasp on the political situation in Ottawa. On the flip side today's expected hike in rates by the BOC and the concomitant statement may offer some support to CAD bulls. The BOC however, must walk a fine line between controlling inflation spurred by the booming oil business in Western Canada  without inflicting pain on the export dependent manufacturing sector of Central Canada. Therefore BOC speak may have more impact on the little dollar than the immediate quandary of Canadian politics.

Boris Schlossberg is a Senior Currency Strategist at FXCM.