Weekly Economic Update

For the week of October 3 to 7

iStock_000079775461_LargeCanadian GDP got a hand from the restarting of oil production in July after production was hurt significantly due to wildfires in Fort McMurray. Gross domestic product was up by 0.5 percent on a month-over-month basis (expectations were for 0.3 percent) and 1.3 percent on a year-over-year basis (expectations were for 1.0 percent). The Canadian dollar responded favorably to this news and appreciated against the US dollar by approximately 0.2 percent immediately after the release. Probabilities of a rate cut in a year fell by approximately 5 percent to 39 percent.

Oil prices increased for the third straight day on Friday, bringing prices up to $48.24 per barrel. The momentum is continuing this morning with prices up an additional 0.89 percent. The Canadian dollar is responding favorably to recent movements in the price of oil and is currently trading up against the US dollar. Todays expected range is 1.3039 – 1.3139.

The leader of the United Kingdom has laid out a timeline of when the country will leave the European Union, stating that article 50 will be put into place by the end of March 2017. The entire process is expected to take approximately two years. Prime Minister Theresa May has also said she is planning to launch a bill that will incorporate EU regulations in the United Kingdom. Markets are showing signs of concern this morning that this exit will take the form of a “hard Brexit” instead of a “soft Brexit”.

Data this week out of Canada includes RBC Canadian Manufacturing PMI, Building Permits, International Merchandise Trade, and the Net Change in Employment. Employment is expected to have increased by 7.4K while the unemployment rate is expected to remain unchanged at 7 percent. In the United States, data this week will include Manufacturing PMI, ISM Manufacturing, Trade Balance, Factory Orders, and Nonfarm Payrolls. Nonfarm Payrolls are expected to have increased by 170K after a 151K increase in August.

Source: Bloomberg

Posted by Concentra Financial Markets

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