For the week of May 16 to 20
The Canadian dollar strengthened in early trading from Friday’s close after US banks released a report on the oil market, indicating rebalancing is occurring faster than expected. Goldman Sachs concluded a supply deficit occurred one quarter earlier than forecast, while Barclays noted improving demand and non-OPEC production underperformance is offsetting the OPEC supply growth. The report drove oil prices above $47/bbl and USD/CAD, currently trading at 1.2922, touched low 1.29s. Today’s expected range is 1.2900-1.3000.
Today’s Canadian releases include Existing Home Sales for the month of April, with sales expected to have slowed to 8% year over year. Later today the Bank of Canada will release its semi-annual review. This publication will review the inflation target, provide an estimate of Canada’s effective lower bound and wages. The next rate decision will take place on May 25.
Empire manufacturing out of the US was released earlier this morning, with general business conditions missing expectations for the month of May posting at -9.02 (markets estimated +6.5). Prices paid, new orders and inventories have all fallen, which brings American manufacturers back to negative readings which were experienced in 8 out of the 9 months leading up to February. Later today, the NAHB Housing Market Index is expected to remain steady at 59, and March numbers for US Treasury International Capital (TIC) Net Monthly flows will wait to see if investors were net sellers of U.S. long-term securities again.
Globally, markets reacted to data out of China as retail sales disappointed, slowing to 10.1% year over year in April, from 10.5% in the prior month. Industrial production also slowed, growing 6% from 6.8% in February.
The week ahead:
The first half of the week we will see an update to Canadian Manufacturing sales for the month of March. Sales are expected to have slowed 2.0% over the month, slightly less negative than February’s negative 3.3% growth rate. International securities transactions and wholesale trade sales for the month of March will be released Wednesday and Thursday, with sales expected at -0.5%. Then on Friday, retail sales will be released surveyed at -0.6% for the month of March (-0.4% excluding autos) while CPI, also posted on Friday, should post 1.7% advancement over the year, or 2.0% as measured by Core.
Out of the US, Housing Starts and building permits are expected to be up 3.3% and 5.5% for the month of April, hoping to erase the negative February numbers. Tuesday will also see a release to CPI, expected to post at 1.1% year over year, or 2.1% when excluding food and energy. Industrial production will round out Tuesday, expected to be up 0.3%. The FOMC meeting minutes from April will be released on Wednesday. Business outlooks as surveyed by the Chicago Fed National Activity Index, and the Philadelphia Fed Business Outlook will be released on Thursday. Finishing off the week, existing home sales are expected at 1.3% for April (5.40m), slightly lower than March’s 5.1% advancement.
Posted by Concentra Financial Markets