For the week of March 6 – 10.
Fed Chair Janet Yellen seems to have confirmed that the Fed will be raising interest rates in March; speculators have the rise’s probability at 96%. Yellen said that assuming employment and inflation are still in line with the central bank’s expectations, an adjustment to the overnight rate will be appropriate in March. Yellen also stated that rate adjustments will be less gradual than in the past. Fed Vice-Chairman Stanley Fischer echoed his support of a rate hike: “there is almost no economic indicator that has come in badly in the last three months.”
China’s National People’s Congress announced a 2017 growth target of “around 6.5% or higher if possible,” compared to last year’s range of 6.5% – 7.0%.
Data releases in Canada this week will include international merchandise trade, housing starts, and employment. Friday’s employment release will follow a posting of 48.3K in January which was made up of 15.8K full-time positions and 32.4K part-time positions.
In the United States this week, releases are expected for factory and durable goods orders, trade balance, ADP employment change, wholesale inventories, and employment. Friday’s Nonfarm data release will be under close scrutiny leading into the March 15 Fed policy meeting, where investors are expecting the first rate hike of the year.
For the week of February 13-18
The Canadian economy continued to surprise economists in January by adding 48.3K positions, nearly 60K more than expected; however, the underlying details are not as strong as last month’s results. Full time employment was increased by 15.8K positions, while part-time positions increased by 32.4K. The unemployment rate in Canada dropped to 6.8% from 6.9% and the participation rate bumped up slightly to 65.9.Gains were led by an increase in demand for individuals in the business and financial services.
A monthly report released by the Energy Information Administration on Friday gave a bit more insight into the OPEC production cut and the oil market in general. According to the report, OPEC compliance to the most recent production cut is currently at approximately 90%, with Saudi Arabia cutting further than they had committed to. Another positive from this report was the indication of increasing demand, which will assist in closing the supply and demand gap. The International Energy Administration sees demand for oil increasing by 1.4 million barrels per day in 2017. Oil prices are currently down by 0.39%.
It will be an extremely quiet week for economic data in Canada with the only notable releases falling on Wednesday and Friday: manufacturing sales and international securities transactions respectively. The United States is expecting a busier week with data releases coming for PPI final demand, Empire manufacturing, consumer prices, retail sales, industrial production, and housing starts.
The Canadian dollar is trading more or less in line with the U.S. dollar this morning. Today’s expected range is 1.3049 – 1.3149.
For the week of February 6 – 11
After a relatively slow month for data in Canada, we will see a pick-up in releases this week. Data will be released for international merchandise trade, building permits, housing starts, and employment. Markets will be keen to see how the Canadian economy will follow up in January to the 46.1K increase in new positions we saw in December. In the United States this week, releases are expected for the trade balance, wholesale inventories, and University of Michigan sentiment.
Headline non-farm payrolls data was dulled by a weaker than expected posting for the unemployment rate and hourly earnings on a month-over-month and year-over-year basis. The U.S. economy added 227K new positions in January, beating expectations by nearly 50K and rising 70K from December. However, the unemployment rate ticked up to 4.8% from 4.7%, and hourly earnings growth dropped to 2.5% on a year-over-year basis from 2.9% in December. The U.S. dollar went from gains to losses against the Canadian dollar on release of these figures.
Daniel Atkinson, Head of the oil industry and markets division at the International Energy Administration expressed his belief that oil prices will not likely reach a level of $65 per barrel any time soon, even with OPEC’s recent production cut. Mention was made of increasing prices leading to a bump in U.S. shale production which once again brings the supply side of the equation higher. Despite this somber outlook for the price of oil, Atkinson believes that compliance by OPEC members has been solid. Oil prices are currently up by a modest .17%. The Canadian dollar is down against the U.S. dollar this morning. Today’s expected range is 1.2994 – 1.3094.
For the week of January 30 – February 5
GDP numbers for November will be released on Tuesday and are expected to have grown by 0.3% on a month-over-month basis, compared to an equal drop of 0.3% in the month prior. Canadian Manufacturing PMI will be released today for January and will be following a posting of 51.8 in December.
We will see a bit more action out of the United States this week with releases expected for personal income and spending, Chicago purchasing manager, ADP employment change, ISM manufacturing, nonfarm payrolls, factory orders, and durable goods orders. To cap things off, the Fed is holding a policy meeting with their decision being released on Wednesday. Markets are generally expecting that the central bank will remain on hold, with the current implied probability of a rate hike sitting at 14.5%. However, as has been the case at the past few meetings, markets will be interested to hear updated commentary from Janet Yellen on the state of the United States economy now that Donald Trump is officially the president.
Donald Trump has signed an executive order banning immigrants and refugees from seven Muslim-majority countries for at least the next 90 days. This ordeal has led to mass confusion and anger throughout the world. Canada and others re-pledged their support to these countries while many multinational companies have ensured this would be a negative to business. The order left many individuals stranded in airports throughout the United States.
Oil prices are currently up by 0.21% and the Canadian dollar is flat against the US dollar.
Annualized GDP posted at 1.9% for the fourth quarter in the United States, significantly lower than the 2.2% that was expected, and the third quarter growth of 3.5 percent. Weakness in exports was a large factor in this decline and can be at least partly blamed on the recent strengthening in the US dollar. Imports increases as well as the US dollar had more purchasing power internationally. As has been the case for GDP lately, consumer spending continued to be the driving force for growth.
For the week of January 23 – 28
The Bank of Japan’s Haruhiko Kuroda has a rosy view of the economy, and much of it has to do with the new policies expected from the United States under Donald Trump. Unlike the heads of many other central banks, Kuroda doesn’t believe that Trump’s bias toward protectionist trade will hurt the global outlook. Although he does agree that protectionist trade hurts global growth, he believes that major economies understand the importance of trade, and that the United States will likely not take this protectionist stance. The Canadian government has said they would be willing to negotiate bilateral trade agreements with Mexico in the case that trilateral trade agreements including the United States under the NAFTA agreement are not sufficient. Concerns rose after Trump’s speech in which “America First” was a focal point.
Markets have reacted poorly to Donald Trump’s presidency as there has been little further mention toward infrastructure spending. Investors will continue to study the president’s actions in order to gain a better understanding of how the next four years will likely play out.
Oil prices are down as the number of active rigs in the United States continues to rise. Prices are currently down by 1.33% after gaining over 2% on Friday. The Canadian dollar is trading up against the U.S. dollar this morning. Today’s expected range is 1.3240 – 1.3340.
With little economic data expected out of Canada this week, focus will be on the United States, which is expecting releases for Manufacturing PMI, Wholesale Inventories, New home sales, GDP, University of Michigan Sentiment, Personal income, and Personal spending.