For the week of March 14 to 18
Canada saw a weak employment report on Friday. Net employment fell by 2.3k bringing the unemployment rate up to 7.3 percent, the highest it has been in nearly three years. Even worse than the headline number is a drop of 52,000 full-time positions, offset by an increase in 49,500 part-time positions.
The Iranian oil minister has expressed that they will not have any interest in talking about an oil production freeze until they have reached a daily output of four million barrels. Russia, Saudi Arabia, and others were told to “leave them alone” until they reach this point. Oil prices are down sharply this morning, approximately 2.52 percent, to below $38 per barrel at $37.53 following a strong week. The Canadian dollar is sharing in oils pain and is currently depreciating in value against its United States counterpart. Todays expected range is 1.3180 – 1.3280.
This week, most attention will be focused on the Federal Reserve’s rate decision on Wednesday. Although the market is only pricing in a 4 percent chance of a rate hike, the tone of this meeting will give the market a better idea of how many, if any, rate hikes could be seen by the end of the year. Recent strength in the economy will likely lead Federal Reserve Chair Janet Yellen to reaffirm the central banks plans to continue its rate hike program throughout the remainder of the year. The odds of the Fed raising their overnight interest rate throughout the remainder of this year are continuously changing. Odds have been increasing from 30 percent a month ago, to 68 percent a week ago, and up to as much as 77 percent recently. In addition, the market is pricing in a 50 percent chance of a rate hike at the June policy meeting, up from a mere 2 percent chance a month ago.
We will be seeing data releases this week in Canada from Retail Sales and Consumer Prices. Retail Sales are expected to grow by 0.6 percent for the month of January after falling by 2.2 percent in December. Consumer Prices will likely rise by 0.4 percent, slightly more than December’s 0.2 percent growth. It’s a big week for data in the United States this week with releases expected for Retail Sales, Empire Manufacturing, Housing Starts, Consumer Prices, and Industrial Production. In addition, the Bank of Japan will be holding a policy meeting this Tuesday.
Posted by Concentra Financial Markets