For the week of September 17 – 21.
Similar to Thursday’s consumer prices release, retail sales for the month of August in the United States missed expectations across the board. On a headline basis, sales grew by 0.1 percent, sitting below the expected 0.4 percent. After excluding autos and gas, sales still only grew by 0.2 percent, missing the expected growth of 0.5 percent. The apparel and clothing category were the main contributing factors for August’s weak performance. However, the upward revisions of July’s growth saved this month’s figures. Headline growth was revised upward from 0.5 to 0.7 percent, while measures (excluding autos and gas) were revised upward from 0.6 to 0.9 percent.
Canada’s scheduled data releases include manufacturing sales, retail sales, and consumer prices. As of now, manufacturing sales are expected to have posted growth of 1.0 percent for the month of July. These releases will likely give investors more clarity on the Bank of Canada’s interest rate hike on October 24 (currently being priced in at an 86 percent probability). Scheduled data releases in the United States include empire manufacturing, housing starts. and building permits.
Both the United States and Canada’s government yields are trading 1 to 2bps higher with S&P futures lower (-2.3). The Canadian dollar is extending last week’s gains vs. the US dollar this morning, ahead of an important deadline for a ratified Nafta agreement this month. Today’s expected range of Canadian dollar is 1.2971 – 1.3071.
For the week of September 10 – 14.
The loss of positions was the main focus of August’s Canadian employment results release on Friday. Compared to the expected increase of 5K, 51.6K part-time positions were lost, a great deal of which were focused in Ontario. In fact, part-time positions fell by 92K, while full-time positions increased by 40.4K for the month of August.
Canada’s unemployment rate currently sits at 6.0 percent, up from July’s 5.8 percent. These employment figures will most likely be sufficient for the Bank of Canada to slow down their consideration of accelerating rate hikes.
However, the employment figures in the United States continued to increase for the month of August, with nonfarm payroll increasing 201K positions. Average hourly earnings on a month-over-month and year-over-year basis also exceeded expectations, growing by 0.4 and 2.9 percent respectively. The unemployment rate in the United States remained unchanged at 3.9 percent, despite economist predictions of decreasing to 3.8 percent.
The Canadian dollar is currently trading slightly down against the US dollar. Today’s expected range is 1.3133 – 1.3233.
For the week of September 4 – 7.
Despite being a short week, scheduled economic releases for Canada include policy decisions, international merchandise trade data for July, building permit numbers for July, employment figures, and the Bank of Canada’s interest rate decision. Currently, there is a very small chance (11.6 percent) of a rate hike being implied by the market. However, markets are expecting a 76 percent interest rate hike closer to the October policy meeting.
Scheduled economic releases for the United States include manufacturing PMI, construction spending, ISM manufacturing, trade balance, and employment data. The change in nonfarm payrolls is expected to have increased to a level of 191K for August from the previous level of 157K. The unemployment rate is expected to remain unchanged at 3.9 percent.
The Canadian dollar is trading down significantly against the United States this morning. Uncertainty remains over whether or not an agreement will be reached between Canada and the United States on trade. US president Donald Trump has expressed there is no “political necessity” to keep Canada in the NAFTA agreement. Today’s expected range is 1.3114 – 1.3214.
For the week of July 30 – August 3.
Annualized quarter-over-quarter GDP growth in the United States rose to 4.1 percent, marking the largest growth rate since 2014. Although slightly shy of the expected growth of 4.2 percent, the rise was significant from the revised first-quarter GDP reading of 2.2 percent. The growth will more than likely be used by Trump administration to prove the success of recent policy changes. On the contrary, personal consumption jumped by 4.0 percent, exceeding expectations of a 3 percent jump.
Canada’s scheduled releases this week include industrial product price index, month-over-month and year-over-year GDP numbers, Markit Canada manufacturing PMI, and international merchandise trade. Scheduled releases in the United States this week include home sales, personal income and spending, ADP employment data, durable goods, and non-farm employment data. An FOMC rate decision is also scheduled for Wednesday, where markets see less than a 1.3 percent chance for a rate hike.
The Canadian dollar is trading up slightly against the US dollar this morning. Today’s expected range is 1.2995 – 1.3095.
For the week of July 16 – 20.
The University of Michigan sentiment posting in the United States dropped to a level of 97.1 for the month of July, missing expectations of 98.0, and falling from June’s posting of 98.2. The detail also notes the decreased reading of inflation for both current conditions and predictions for 1 year, and 5-10 year. The decrease will most likely fuel the ongoing fire of the debate on whether or not the Federal Reserve will proceed to increase interest rates.
In the Federal Reserve’s semi-annual monetary policy report, the central bank re-affirmed its position of gradually hiking interest rates. The Federal Reserve also confirmed their belief these hikes will be able to exist along with an expanding economy, strong labor numbers, and an inflation rate close to target level. If the Reserve is planning to stick to their original plan, they will need to hike interest rates twice more in 2018 (after already hiking twice this year).
Even though oil prices are down slightly this morning, the Canadian dollar is currently trading up against the US dollar. Today’s expected range is 1.3092 – 1.3192.
For the week of July 9 – 13.
According to Statistics Canada, the unemployment rate for June rose to 6.0 percent due to a strong surge in the labour force of 76k. The Canadian economy added 32k jobs in June, while consensus expectations were for a 20k gain, with about 30 percent of the job gains coming in the full-time category (+9k). Goods producing jobs (+47k) saw a strong bounce back with gains coming in for both construction (+27k), and manufacturing (+11.3k). Service producing jobs were down (-15k), led by the wholesale/retail sector (-14k), and accommodation/food services down (-16k). On a regional level, Ontario (+35k), Saskatchewan (+8k), and Manitoba (+4k) added jobs in June, while the jobs market either remained flat, or shrank in other provinces.
The US June job report was strong with the US economy adding 213k jobs, exceeding expectations of 195k. The number of employed people in the workforce was up by 102k, and the number of unemployed people increased by 499k. Due to increased labour force participation, the unemployment rate increased to 4.0 percent from 3.8 percent. Goods producing jobs showed continued strength, with gains in both manufacturing (+36k) and the auto (+12k) industry. Service providers also boosted payrolls, led by education/health services (+54k), and professional/business services (+50k). Average hourly earnings saw an increase of 2.7 percent from the previous year, which was less than the expected 2.8 percent.
Scheduled economic data releases in Canada this week include housing starts, building permits, the new house pricing index, and existing home sales. Meanwhile, the Bank of Canada is scheduled to announce its rate decision on Wednesday. Consensus among economists surveyed by Bloomberg is for the Bank to increase its target for the overnight rate to 1.50 percent. Current market implied probabilities of a rate hike through OIS trading shows an 85 percent probability of a rate hike. Major releases in the US this week include PPI, CPI, the import price index, and the University of Michigan Sentiment gauge.
Both US and Canada government yields are trading 2 to 3bps higher with S&P futures higher (+9.4). The Canadian dollar is currently trading at 1.3075 against the US dollar; today’s expected range is 1.3025 – 1.3125.
For the week of July 2 – 6.
Canadian GDP came in at 0.1 percent month over month in April, vs expectations of zero percent growth (economists believed poor weather conditions in April could’ve negatively impacted results). Both Manufacturing and Utilities sales increased for April; Manufacturing increased to 0.8 percent, while Utilities increased to 1.6 percent. Retail sales, however, declined 1.3 percent. On an annual basis, GDP matched consensus at 2.5 percent. The economy is currently on track for growth to accelerate beyond 2 percent in the second quarter.
US personal income in May increased 0.4 percent, while spending decreased 0.2 percent, falling short of the expected 0.4 percent increase. Although the spending rate remained unchanged after adjusting for inflation, the savings rate increased to 3.2 percent, due to incomes exceeding the spending rate.
The University of Michigan’s reading in June for concerns about the economic impact of a trade war came in at 98.2 (expectations were for a 99.0 reading). The expectations measure also decreased to 86.3 from May’s 89.1 reading. However, the conditions gauge measuring Americans’ perception of their finances was up 116.5 from 111.8 in May.
The Canadian dollar is currently trading up against the US dollar. Today’s expected range is 1.3097 – 1.3197.
For the week of June 25 – 29.
Retail sales for April fell by 1.2 percent on a month-over-month basis, going against the expectations for a flat zero percent posting. Excluding auto sales, the decline lessened to 0.1 percent. March retail sales increased from 0.6 percent to 0.8 percent on a month-over-month basis. Stats Canada noted the weaker than expected performance could be due to “poor weather”.
In addition to a weak retail sales release, consumer prices also missed expectations for the month of May, posting at 0.1 percent on a month-over-month basis (vs. expectations for 0.4 percent). On a year-over-year basis, consumer prices have risen to 2.2 percent, quite a bit shy of the surveyed 2.6 percent for May. Two significant factors in the lower inflation reading were lower prices in the phone, and travel categories. The largest upward contributor to the reading was the recreation and education categories (0.27 percent).
It will be a relatively quiet week for Canadian economic releases this week. The major release to look forward to is the April GDP figures. Consensus expectations are for zero growth month-over-month, and a 2.6 percent growth rate on an annual basis. Other releases include industrial product prices, and the raw material price index. The Bank of Canada will also release their second quarter business outlook future sales, senior loan officer survey, and overall business outlook survey. US data releases include numerous housing figures, sentiment gauges, various manufacturing numbers, and the final print of first quarter GDP.
The Canadian dollar is trading flat to slightly down against the US dollar from Friday’s market close. Today’s expected trading range is 1.3241 – 1.3341.
For the week of June 18 – 22.
Foreigners bought a net $9.13 billion of Canadian securities in April compared to $6.40 billion in March. $8.79 billion were bonds, and $2.41 billion were Canadian stocks and investment shares. Foreigners divested $2.07 billion of Canadian money market paper, while Canadians sold $0.65 billion of foreign securities in April.
Canadian manufacturing sales unexpectedly declined by 1.3 percent month-over-month to $56.2 billion in April after increasing 1.4 percent in March. Excluding autos, sales decreased to 1.7 percent, while motor vehicle manufacturing increased to 3.5 percent. The partial maintenance shutdowns at Canadian refineries were one of the main contributing factors of the decline. 10 out of the 21 industries decreased in sales. On a year-over-year basis, manufacturing sales were up 3.6 percent.
Canadian existing home sales declined 0.1 percent month-over-month, versus expectations of 1.7 percent. Existing home sales in Toronto increased by 1.6 percent month-over-month, but decreased in Vancouver by 0.2 percent month-over-month. The average home price in Canada rose 0.9 percent month-over-month to $476,424.
Data releases in Canada this week include retail sales and CPI. Data releases in the US this week include housing figures, sentiment gauges, and manufacturing indices.
Canada and US government yields are trading 1 to 2bps lower with S&P futures lower (-19.1). WTI crude oil is currently trading at $65.04 per barrel. The Canadian dollar is currently trading at 1.3183 against the US dollar. Today’s expected range is 1.3133 – 1.3233.