Weekly Economic Update

463005465For Week of Oct 20 – 24

In Canada this morning, Wholesale Trade Sales have increased by 0.2% on a month over month basis for August, beating expectations of a drop of 0.3% with gains in machinery, wood and metal products. Later this morning, the Bloomberg Nanos Confidence Index will update for the period ending October 17, 2014. In the most recent update, the Confidence Index released at 59.2 in its second straight weekly drop. It will be quiet throughout the United States today without any economic data on the schedule.

Focus this week throughout Canada falls on the Retail Sales data and Bank of Canada Rate Decision scheduled for Wednesday, October 22, 2014. Retail Sales are forecast to show no change on a month over month basis for August and Retail Sales Excluding Autos are expected to increase by 0.2%. The Bank of Canada Rate is expected to remain at 1.00%. Aside from Wednesday, the Canadian economic schedule is fairly quiet with nothing else set to release for the remainder of the week. Focus will shift to data out of the United States.

Headlines throughout the U.S. this week include updates to the Consumer Price Index, Initial Jobless Claims, The Leading Index, and New Home Sales. The CPI is expected to show no change for the month of September after falling by 0.2% in the previous release. Initial Jobless Claims are forecast to increase to 283K for the week ending October 18, 2014 after hitting a low of 264K in the previous update. Later this week, New Home Sales are forecast to fall by 6.8% for September following a gain of 18.0% in the previous month. Speculation continues to build throughout the United States that the Federal Reserve may delay the final round of tapering until the following rate announcement, instead of the next announcement scheduled for October 29th.

In the currency markets, the Canadian dollar is unchanged in early trading this morning against its U.S. counterpart. Over recent weeks, the CAD outlook as weakened significantly as oil prices have dropped and rumors of the Federal Reserve increasing interest rates relatively soon have picked up. Investors are not expecting the Bank of Canada to increase interest rates until early 2016 at the earliest. This could lead to further CAD weakness, but as the U.S. continues to gain strength, we should see the Canadian economy recover, as the two countries remain significant trading partners. Focus this week for the CAD falls on Wednesday’s Bank of Canada announcement.

Todays expected range: 1.1220 – 1.1320

Source: Bloomberg

Posted by Concentra Financial Markets

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