Weekly Economic Update

For the week of November 24 to 28

487806549It is a quiet morning throughout Canada without any major economic data on the schedule. At the end of last week, the CPI beat expectations with an increase of 0.1% for the month of October. On a year-over-year basis, inflation rose to 2.4%, higher than economist expectations of 2.1%. The unexpected increase was due to gains in gasoline and clothing, signaling that the economy may be stronger than the Bank of Canada thought. South of the border, The Dallas Fed Manufacturing Activity Index is expected to release at 9.0 for November, down from 10.5 in the previous month.

Headlines throughout Canada this week include updates to Retail Sales for September and September GDP figures. Both releases will be important as the next Bank of Canada Rate Announcement will take place early next week, on Wednesday, December 3. Retail Sales are expected to show a gain of 0.5% on a month-over-month basis, compared to a drop of 0.3% in the previous month while the GDP is forecast to increase by 0.4% MoM.

Focus throughout the United States this week falls on the third-quarter GDP update on the schedule for tomorrow. GDP is expected to release at 3.3% on an annualized basis for the third quarter, down slightly from 3.5% in the latest update. Also on the schedule, updates to personal Income and Personal Spending are expected to show gains of 0.4% and 0.3% respectively for the month of October. This will be an important week for economic data as we approach the next FOMC rate announcement scheduled for mid-December. The markets are still expecting to see a rate increase throughout the United States before any movement takes place in Canada.

The Canadian dollar has fallen slightly in early trading this morning against its U.S. counterpart after showing strength late last week following the better-than-expected CPI data. Focus will fall on the busy week of economic data out of both Canada and the United States as we approach the next round of central bank rate announcements. The price of oil continues to trade close to $76 per barrel and will limit the upside of strong economic data to the Canadian dollar moving forward.

Todays expected range: 1.1200 – 1.1300

Source: Bloomberg

Posted by Concentra Financial Markets

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