For the week of May 30 to June 3
The current account deficit in Canada widened to -$16.77 billion in the first quarter of 2016, in line with analyst expectations and widening $1 billion from the prior quarter. The goods deficit expanded to -$6.3b, the biggest shortfall in a year, while the services deficit narrowed slightly to -$5.7b. Net acquisition of Canadian bonds by foreigners totaled $30b over the first quarter as reflected in the Financial account. Raw material prices released short of consensus expectations, rising 0.7% over the month of April (est. 1.1%) due to a 4.2% in crude energy product prices offset by falling prices for animal and animal product and metal ores. Industrial product prices declined 0.5% over the month with vehicle prices falling 2.1% being the main driver.
There are no releases out of the U.S. today due to the national holiday, Memorial Day.
With a relatively quiet day out of North America, expect USD/CAD to trade within a narrow band with todays expected range: 1.3010-1.3110 USD/CAD. The price of oil slid again today, although still above $49/bbl, as Canadian producers resume oil production output in Alberta and the Organization of Petroleum Exporting Countries (OPEC) prepares to meet in Vienna on June 2 to discuss production policy.
The Week Ahead:
It’s a quiet calendar out of Canada this week with the major release being GDP tomorrow. The economy is expected to have advanced just 1.4% year over year (-0.1% over the month). Quarterly GDP Annualized is expected at 2.8% for the first quarter. Out of the U.S., tomorrow we’ll see an update to Personal Income and Spending for April, expected to rise 0.4% and 0.7%, respectively (prior 0.4%;0.1%). The Chicago Purchasing Manager Index is expected to increase lightly to 50.5 in May while Dallas Fed Manufacturing Activity should release less negative at -8.0. On Wednesday, the Fed will release its Beige Book alongside an update to ISM manufacturing data. Rounding out the week we will see a release to April’s Trade Balance, expected to widen slightly to -$41.0b and Nonfarm Payrolls expected at 160K in May with the unemployment rate edging down to 4.9%.
Posted by Concentra Financial Markets