For the week of May 9 to 13
Oil prices have been on the rise as fires in Canada continue to force production decreases from the country. As of now, an estimated 1,000,000 barrels of oil per day have been taken offline due to the blaze that continues today. Once the fire is brought under control, oil production could take a week or more to come back online. Another factor in oil price change this morning is the replacement of Saudi Arabia’s oil minister, who has been opposed to production freezes without Iran’s participation. However, on his first day, Khalid Al-Falih stated he will maintain the kingdoms current oil policies which have involved high supply and focus on market share with little concern regarding prices.
Oil prices are currently down around .13% this morning to $44.60 per barrel. The Canadian dollar is down against the U.S. dollar following a week of relatively weak performance. Today’s expected range is 1.2906 – 1.3006.
Economists are warning that the wildfire will hurt Canadian growth substantially, and may even cause the economy to stall with zero percent growth in the second quarter according to some predictions. This will without a doubt be on Bank of Canada Governor, Stephen Poloz’s mind and will likely ensure that the Bank of Canada will stay on hold at their upcoming policy meeting. As of now, there is a higher chance of a cut at the May policy meeting than a hike.
Following weaker-than-expected jobs data out of the United States on Friday, the chance of a rate hike at the Fed’s June meeting is slim. According to data for the Change in Nonfarm Payrolls, the United States added approximately 160k jobs, short of the expected 200k. The chance of a rate hike in June now sits at approximately 6 percent and the next time the chance is close to 50 percent is in December. However, New York Fed President William Dudley stated on Friday that 2-3 rate hikes are still possible by the end of this year.
Coming up this week, we will not see much data released out of Canada aside from today’s release for Housing Starts. Housing Starts posted at 191.5k for the month of April, more or less in line with economist expectations of 193.0k. Multiple Starts dropped to 117.9k in April. In the United States data released this week will include Wholesale Inventories on Tuesday and both Retail Sales and the U. of Mich. Sentiment on Friday.
Posted by Concentra Financial Markets