For the week of January 26 to 30
In Canada this morning, the Bloomberg Nanos Confidence Index is set to update for the week ending January 23 after releasing at 56.8 in the latest update. The Index has increased in three straight weekly releases leading up to today. In the United States, the Dallas Fed Manufacturing Activity Index will update for January with economist expectations calling for a value of 3.2, down from 4.1 in the latest update.
It is a very quiet week throughout the Canadian economy with all focus falling on the lone release on the schedule. GDP is expected to post no change for November after increasing by 0.3% in October. On a year over year basis, GDP is forecast to increase by 2.1%. Headlines throughout the United States this week include updates to the Consumer Confidence Index, the FOMC overnight rate, and GDP. Confidence is expected to rise to 95.5 for January, up from 92.6 in December. The Federal Reserve is expected to maintain the current rate; however markets are expecting some sort of update from the central bank in regards to timing of the next interest rate movement. Fourth-quarter GDP is forecast to show an annualized increase of 3.1% for the fourth quarter.
The Canadian dollar continues to trade above 1.24 in early trading this week with oil prices hovering around $46 per barrel. If oil prices continue to show weakness, speculation of another Bank of Canada rate cut will increase. Markets are already partially pricing in another drop in interest rates. In a relatively quiet week aside from the GDP update in Canada, attention will shift to news south of the border, specifically the FOMC rate announcement. Markets are anticipating an FOMC rate hike sometime throughout 2015, although no timetable has been provided at this point. Given the direction that each of the central banks are trending, it is expected to see the USD strengthen even further against the CAD in the short term.
Todays expected range: 1.2410 – 1.2510
Posted by Concentra Financial Markets