For the week of November 5 – 9, 2018
Employment in Canada missed expectations on a headline basis for October, adding 11.2K positions instead of the 15.0K that was expected. However, details of the release are stronger, with full-time positions actually increasing by 33.9K while part-time positions fell. Hourly earnings growth dropped significantly to 1.9 percent for the month against expectations for 2.3 percent. This marks the fifth month in a row where wage growth has slowed. Canada’s unemployment rate dropped to 5.8 percent due mostly to a shrinking labor force.
In the United States, nonfarm payrolls jumped by 250K in October, a significant beat over the 200K expected for the month. Some of the month’s strength is being attributed to a sort-of recovery from September’s figures which were adversely affected by Hurricane Florence. The unemployment rate in the United States remained unchanged at 3.7 percent.
It is going to be a quiet week for data in Canada, with the only notable release coming in the form of building permits and housing starts on Monday and Wednesday. In the United States, we will see releases for PPI final demand and wholesale inventories along with a Fed policy meeting on Thursday. As of now, the Fed is generally not expected to increase interest rates at this weeks meeting.
The Canadian dollar is currently trading up against the US dollar. Today’s expected range is 1.3048 – 1.3148.
For the week of October 29 – November 2.
Scheduled economic releases for Canada this week include update on GDP, new employment figures, and an update on international merchandise trade on Friday. August’s GDP release will follow July’s growth of 0.2 percent and 2.4 percent on a month-over-month and year-over-year basis respectively. In terms of employment, October’s release indicates a strong headline bump of 63.3K positions entirely made of part-time employees.
Scheduled economic releases for the United States this week include personal income, personal spending, ADP employment change, ISM manufacturing, trade balance, nonfarm payrolls and more. Nonfarm payrolls are expected to have jumped by 190K positions through the month of October, following September’s smaller bump of 134K. The unemployment rate is expected to remain at a record low level of 3.7 percent.
Third quarter GDP released on Friday last week came in at 3.5 percent, exceeding expectations of 3.3 percent and following second quarter GDP growth of 4.2 percent. If this pace continues for future readings, the United States will see its strongest back-to-back quarterly GDP readings since 2014. Third quarter strength is expected to have been pushed by business investment and consumer spending.
The Canadian dollar is currently trading up against the US dollar. Today’s expected range is 1.3041 – 1.3141.
For the week of October 22 – 26.
The week of the Bank of Canada’s policy meeting has arrived. Outside of the central banks interest decision on Wednesday, the only other notable release this week is from wholesale trade sales this morning. As of today, the market implied probability of the Bank of Canada increasing interest rates on Wednesday is 96.4%. Scheduled data releases in the United States this week include Markit US manufacturing PMI, new home sales, wholesale inventories, durable goods orders, and GDP. Also of note, the European Central Bank will be making a rate decision this week on Thursday.
Missed expectations for both retail sales and consumer prices last Friday ended the week on a disappointing note. Retail sales fell by 0.1 percent in August against expectations for a jump of 0.3 percent. July’s 0.3 percent growth was also revised downward to 0.2 percent.
Although economists were calling for growth of 0.1 percent, consumer prices fell by 0.4 percent in September, marking the second straight month of indicator declines. On a year-over-year basis, prices are up by 2.2 percent, dropping from last month’s reading of 2.8 percent.
The Canadian dollar is currently trading up against the US dollar. Today’s expected range is 1.3033 – 1.3133.
For the week of October 15 – 19.
Expected data releases in Canada this week include manufacturing sales, retail sales, and the ever-important consumer prices. Manufacturing sales are expected to have dropped by 0.8 percent in August after increasing by 0.9 percent in July. Retail sales are expected to have increased by 0.4 percent on a headline basis in August, and a lesser 0.2 percent when excluding autos. This 0.4 percent increase follows the slightly lower 0.3 percent gain in July.
Economists expect consumer prices will reverse August’s 0.1 percent decline, and will increase by 0.1 percent for the month of September on a month-over-month basis. The Bank of Canada will most likely be watching the results of this release, since their upcoming October 24 policy decision meeting is fast approaching. Currently, there is a 98.2 percent market implied probability of an interest rate hike at this meeting.
Expected data releases in the United States this week include retail sales, monthly budget statement, housing starts, and building permits.
The Canadian dollar is currently trading relatively flat against the US dollar. Today’s expected range is 1.2976 – 1.3076.
For the week of October 9 – 12.
It will be a quieter week for data in both Canada and the United States this week. Scheduled releases in Canada include housing starts, building permits, and new housing price index. Scheduled releases in the United States include consumer prices on Thursday, which will be watched carefully. Prices on a headline basis are expected to have increased by 0.2 and 2.4 percent on a month-over-month and year-over-year basis respectively. Excluding food and energy, growth levels are sitting at 0.2 and 2.3 percent respectively.
Employment data exceeded the expected 25.0K on a headline basis, rising by 63.3K. Although part-time positions jumped way higher by 80.2K, full-time positions actually dropped by 16.9K. Wage growth dropped to a level of 2.2 percent from 2.6 percent for permanent employees. As expected overall, the unemployment rate dropped to 5.9 percent.
Nonfarm payrolls data missed expectations for 185K jobs, landing instead at 134K. Hurricane Florence is one of the main factors for the lower than expected release. Despite the miss on the headline figures, the unemployment rate dropped further than expected to 3.7 percent, a shocking 48-year low. Lastly, August’s nonfarm payroll was revised from 201K to 270K.
Both US and Canada government yields are trading flat to 1bps higher with S&P futures lower (-14.5). WTI crude oil is trading higher this morning at $74.71. The Canadian dollar is weaker against the US dollar for the sixth straight session. Today’s expected range is 1.2946 – 1.3046.
For the week of October 1 – 5.
Canadian GDP exceeded expectations for the month of July, growing by 0.2 percent on a month-over-month basis, and by 2.4 percent on a year-over-year basis. 12 out of 20 measured industrial sectors experienced increases. Manufacturing was the largest increasing contributing factor (0.13 percentage points), while construction was the largest decreasing contributing factor.
Scheduled data releases in Canada this week include Markit Canada’s manufacturing PMI, international merchandise trade, and employment. September’s employment figures will follow up August’s 51.6K positions. Scheduled data releases in the United States this week include Markit US manufacturing PMI, construction spending, ISM manufacturing, ADP employment change, durable goods, trade balance, and employment. Nonfarm payrolls are expected to release at a level around 185K for the month of September.
The Canadian dollar is up significantly this morning after a deal was reached to include Canada in a trilateral NAFTA deal. Negotiators worked around the clock over the weekend to reach their Sunday deadline. The new deal offers greater access to Canadian dairy to the United States. Further details will be provided in tomorrow’s update. Today’s expected range for the Canadian dollar is 1.2756 – 1.2856.
For the week of September 24 – 28.
Canada’s most important scheduled data release this Friday will be July’s GDP update, following up June’s posting of zero percent month-over-month growth rate, and 2.4 percent year-over-year growth rate. Thursday’s scheduled GDP data release in the United States will more than likely be overshadowed by Wednesday’s Fed meeting. As of now, markets fully anticipate (100 percent probability) the Fed will choose to raise interest rates at their meeting.
Canada’s consumer prices for the month of August released in line with expectations. Although prices decreased by 0.1 percent on a month-over-month basis, and increased by 2.8 percent on a year-over-year basis, both releases declined from July’s figures. Transportation was the largest decreasing contributing factor, while clothing and footwear was the largest increasing contributing factor.
Retail sales in Canada met expectations on a headline basis, increasing by 0.3 percent in June after dropping by a revised 0.1 percent. Excluding autos, retail sales jumped to 0.9 percent, exceeding expectations for a 0.6 percent jump.
The Canadian dollar is currently trading down against the US dollar. Today’s expected range is 1.2895 – 1.2995.
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.