Canada's headline inflation rate dipped to a lower-than-expected 2.6% in October, Statistics Canada reported, against expectations for a 3.1% fall. On a monthly basis, the consumer price index shrank by a seasonally adjusted 0.5% as gasoline prices tumbled sharply from September. On a non-seasonally adjusted basis, the total CPI decreased 1.0% month-to-month. Analysts had expected a 0.6 decline month-over-month.

The core inflation rate, which excludes the eight most volatile components including gas, mortgage interest and fresh fruits and vegetables, was unchanged from September, in line with expectations, and was +1.7% on an annual basis, somewhat lower than the +1.9% forecast.

"This lower than expected report, with notable weakness in a variety of core components adding to the deep dive in gasoline, gives the all-clear signal to the Bank of Canada to continue cutting rates," noted Douglas Porter, deputy chief economist from BMO Capital Markets.

Meanwhile, Canadian natural gas sales fell 3.8% in September compared to the same month last year, Statistics Canada reported. Sales totalled 4.5 billion cubic metres, down from 4.7 billion in September 2007. Commercial sales increased while both residential and industrial sales declined year-over-year.

There were no major data releases in the U.S., though shares of Citigroup continued to plummet, falling below $4 a share Friday after the firm's CEO said he has no plans to break up the company. Shares initially rose early in the day on a report that the banking giant was considering breaking up and selling part of its operations.

In terms of data, regional and state unemployment rates took a turn for the worse in October, as 38 states and the District of Columbia recorded over-the-month unemployment rate increases, five states registered decreases, and seven states had no change. The national unemployment rate was 6.5% in October, having advanced four-tenths of the month and by 1.7% over the year.

U.S. mass layoff actions, involving 50 or more employees from a single firm, came in at a seasonally adjusted 2,140 in October, lower than the previous month's record 2,269 actions, the U.S. Bureau of Labor Statistics reported. The number of mass layoff events this October decreased by 129 after the prior month's total hit a seven-year high. The total number of workers involved was 232,468 in October, below the previous month's 235,681 total.

In overseas news, both euro zone manufacturing and services purchasing managers indexes hit new lows, causing some economists to say the worst may be in store for the euro zone. According to preliminary estimates from Markit Economics, the euro zone manufacturing purchasing managers index fell to a record low in November, coming in at 36.2, down from both the 40.5 print expected and October's 41.1 level. The services PMI for the euro zone slipped to 36.2 for the month, its lowest level in the history of the survey.

In the Asia-Pacific session, the Bank of Japan held its target rate at 0.30%, as was widely expected, seeing as the bank cut their already-low rate by 20 basis points just three weeks ago. In its monetary policy statement, the BOJ said it will work to carry out commercial paper operations and fund operations more flexibly.

By Stephen Huebl, This email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Geoff Matthews, This email address is being protected from spam bots, you need Javascript enabled to view it , Patrick McGee, This email address is being protected from spam bots, you need Javascript enabled to view it , Steve Stecyk, This email address is being protected from spam bots, you need Javascript enabled to view it , Todd Wailoo, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it

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