For the week of March 7 to 11
Markets tied to China reacted weakly over the weekend when China downgraded their expected growth during their two-week long National People’s Congress meeting. China is now set to expand somewhere between 6.5 and 7.0 percent for 2016. Last year’s target was “around 7%”. Also out of China’s National People’s Congress Meeting today was data showing that foreign reserves fell by much less than expected and less than in the prior month as well. On Friday, employment data was releases out of the United States where payrolls increased by 242k despite the fact that wages actually fell for the month of February.
Oil prices rallied throughout last week and ended up at above $36 per barrel, the highest level since early January. Rising oil prices brought the Canadian dollar along for the ride. The Canadian dollar closed the week up 1.4% to C $1.332 ($75.1 U.S. cents). This morning, oil continues to perform extremely well and is up 1.70% to $36.53 per barrel. However, the Canadian dollar is trading relatively weakly against its United States counterpart this morning. Todays expected range is 1.3304 – 1.3404.
Throughout the week, there will be meetings held by many of the large central banks around the world including in the United States, the Euro area, Japan, and Canada. The Bank of Canada will be meeting on Wednesday to make a decision regarding where they will set the overnight rate. Based on economist estimates from Bloomberg, not one economist expects any change in the overnight interest rate, either up or down, in this meeting. A common belief is that the Bank of Canada will remain on pause in anticipation of the federal budget details that will be released later in the month. The European Central Bank is expected to announce additional stimulus in their meeting this week, continuing what has been an ongoing struggle with inflation. In addition, the National People’s Congress meeting will continue in China throughout the week.
In terms of data this week, Canada will be releasing data for the Capacity Utilization Rate, New Housing Price Index, Unemployment Rate, and Net Change in Employment. The Net Change in Employment is expected to add 10.0k for the month of February following a 5.7k decline in January. Canada’s unemployment rate is expected to remain unchanged at 7.2%. In the United States, data will be released for NFIB Small Business Optimism, the Monthly Budget Statement, and for the Import Price Index. There is little data out of either Canada or the United States today, with the only notable release coming from January’s Consumer Credit in the United States. A posting of $16.500b is expected following a posting of $21.267b for the month of December.
Posted by Concentra Financial Markets