For the week of September 26 to 30
The Canadian dollar felt the pain of both falling oil prices and weak economic data, falling by approximately one percent against the U.S. dollar to end last week. The primary driver in oils weakness Friday was statements out of Saudi Arabia discounting the possibility of any production agreements coming out of this week’s meeting in Algiers despite recent rumors of agreements. Prices ended the day Friday down by just shy of four percent at $44.48. In order to incentivize other OPEC members to follow suit, Saudi Arabia has said they are willing to cut their oil production to January levels. Oil prices have erased a portion of Friday’s losses this morning and are currently up by 2.88 percent.
The Bank of Canada was likely disappointed by the two pieces of data released for the country on Friday. Both retail sales and consumer prices were weaker than expected. Inflation now sits at a low 1.1 percent year-over-year rate, compared to 1.3 percent in the previous posting. Low energy prices continue to drag this number lower while the price of foods is generally rising. Making matters even worse, retail sales dropped by 0.1 percent in July while economists were expecting a gain of the same amount. Although these releases likely won’t spur any immediate action by the central bank they will certainly not go unnoticed.
GDP will be released for both the United States and Canada this week on Thursday and Friday respectively. Canadian GDP is forecast to rise by 0.3 percent on a month-over-month basis as the recovery from wildfires continues, and 1.0 percent on a year-over-year basis. Other events expected this week include an American presidential debate tonight, and informal OPEC meeting in Algiers on Wednesday. Data expected out of the United States this week includes wholesale inventories, personal income, and personal spending.
The Canadian dollar is trading relatively flat against the U.S. dollar this morning after a weak performance on Friday. Todays expected range is 1.3112 – 1.3212.
Posted by Concentra Financial Markets