Weekly Economic Update

For the week of September 15 – 19, 2014

In Canada this morning, Existing Home Sales will update for August after showing an increase of 0.8% throughout July. Going into today’s release, existing home sales have increased in six straight months. The Bloomberg Nanos Confidence Index will update for the period ending September 12, 2014 after releasing at 59.1 in the latest update. South of the border, Empire Manufacturing has released at 27.54 for September, beating the expected release of 15.95. This is the highest the index has been since September 2004. Later today, Industrial Production is forecast to show a gain of 0.3% for August after an increase of 0.4% in the previous month. Capacity Utilization is expected to increase slightly to 79.3% for August.

Focus this week throughout Canada falls on the Manufacturing Sales data on the schedule for tomorrow, followed by an update to CPI for August on Friday. The CPI is forecast to show no change throughout August after falling by 0.2% in the previous release. The Consumer Price Index continues to play a key role in the Bank of Canada decisions. The next Bank of Canada announcement isn’t until October 22, 2014, however the central bank is looking for consistent strength throughout the economy before changing their neutral stance, beginning with CPI figures this week.

It is a busy week on the economic calendar throughout the United States. Tomorrow, an update will be made to the Producer Price Index with expectations to see no change throughout August following an increase of 0.1% in the previous month. Excluding food and energy, the index is expected to gain by 0.1%. On Wednesday, the CPI is expected to remain unchanged throughout August while The Federal Reserve is scheduled to make their next rate announcement. The policy rate is forecast to remain at 0.25% with another $10B in tapering split between treasuries and MBS purchases.

In the currency markets, the Canadian dollar has made slight gains against its U.S. counterpart in early trading this morning. Moving forward, we may see the CAD continue to struggle against the USD throughout the rest of the year. The United States is on track to consider rate increases in the first half of 2015, a fairly strong economic outlook while there are still mixed reviews for the outlook of the CAD and the Canadian economy. The CAD will focus on the Canadian CPI data on the schedule this week but will also be left vulnerable to the handful of key releases out of the United States. Strong data this week could continue to push the USD even further against the struggling CAD.

Todays expected range: 1.1030 – 1.1130

Source: Bloomberg

Posted by Concentra Financial Markets

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