Weekly Economic Update

For the Week of May 28 – June 1

US durable goods orders declined more than expected in April, falling 1.7 percent versus consensus expectations of a 1.3 percent decline. The decline was concentrated in transportation. Excluding transportation, orders were up 0.9 percent and the increase was fairly broad-based, spanning computers, electrical equipment and metals; however orders for machinery fell another 0.8 percent following a 3.2 percent drop the month prior. Analysts believe that durable goods orders may be reaching a plateau with the level of activity leveling out.

The final print of the University of Michigan Sentiment gauge for May was a bit lower than expectations with a reading of 98.0 versus expectations of 98.8. The latest reading marks a four-month low as consumers wade through less favourable buying conditions for homes and big-ticket items. The current conditions gauge, which measures American’s perceptions of their finances, fell to 111.8 from 114.9 in April. However, the expectations measure improved to a three-month high at 89.1 from April’s 88.4.

There are two main releases for Canada this week – GDP figures and the Bank of Canada’s rate decision. Consensus expectations are for first quarter GDP to have accelerated to a 2.0 percent annualized pace from 1.7 percent in the fourth quarter of last year. Meanwhile, the Bank of Canada is scheduled to announce its rate decision on Wednesday. Consensus is that the Bank will hold rates steady at 1.25 percent. A few manufacturing releases are also scheduled this week. In the US, GDP figures will also be released along with the employment report, various housing numbers and ISM manufacturing.

The Canadian dollar is trading flat to slightly down from Friday’s market close. Today’s expected trading range is 1.2936 – 1.3036.

Source: Bloomberg

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