For the week of September 6 to 9
After implied probabilities of a September rate hike in the United States fell as low as 20 percent following a weaker-than-expected payrolls release, they eventually crawled their way back up to 30 percent as investors digested information. Stocks increased and the U.S. dollar decreased significantly against the Canadian dollar upon release. Yields increased across the curve sending prices of bonds down in both Canada and the United States.
Russian President Vladmir Putin’s view is that an oil production freeze should be enacted, and this is the opinion his country will take at this month’s OPEC meeting in Algiers. Putin stated that an oil production freeze should be put into place and should exclude Iran until they are able to bring their production back to pre-sanction levels. Oil prices responded favorably to this and increased by 2.97 percent by the close on Friday. This production freeze would likely be more “symbolic” as oil production is already near record highs.
Markets were expecting a material agreement between Russia and Saudi Arabia to be announced at the g-20 summit, but were disappointed as this agreement made no outright mention of an oil production freeze plan. This agreement only went as far as saying that the two oil powers will co-operate in order to stabilize the oil market. Oil prices are currently up by 0.32 percent to $44.58 per barrel.
The trade deficit in Canada shrunk significantly in July from 3.97 to 2.94 billion. The majority of this improvement was due to an increase in the exports of non-energy goods. The details include exports increasing by 3.4 percent on mineral products, car parts, and transportation equipment. In addition, imports fell by 0.1 percent. Another important note is that exports to our neighbor the United States increased by 3.3 percent in the month of July. The Canadian dollar pulled back much of last week’s losses on this report as well as the weaker-than-expected employment figures mentioned above. Todays expected range is 1.2867 – 1.2967.
Coming up this week in Canada, the policy rate decision by Bank of Canada Governor Stephen Poloz and the Bank of Canada is on Wednesday, with little fireworks expected. Data on housing starts and the net change in employment are expected on Friday. In the United States, releases for ISM Non-Manufacturing Composite and Wholesale Inventories are expected this week.
Posted by Concentra Financial Markets