Week Ahead – Fed Meeting, Barrage of Data, and Tech Earnings
With President Biden now in office, markets will be on alert for any remarks from US Senators about whether they’d support the massive stimulus bill he proposed. A tough negotiating battle could see the final proposal being watered down. The Federal Reserve will meet as well. No policy changes...
Canada: Retail Sales Post a Strong Gain in November Even as Restrictions Intensify
Retail sales surged by 1.3% in November, defying Statistics Canada's preliminary forecast which called for a flat reading. Adjusting for price effects, the performance was relatively similar with the volume of sales up 1.2%.
October's gain was revised lower to 0.1%, down from 0.4% reported originally. Taken together...
Dollar Rebounds Broadly as Risk Appetite Recedes
Dollar rebounds broadly today following receding risk appetite. Investors are apparently paring their gains in stocks. Swiss Franc and Euro are the next strongest, followed by Yen. On the other hand, Australian Dollar and Sterling are the worst performing. In particular, the Pound was weighed down by sharp deterioration...
Canada retail sales rose 1.3% in Nov, up in 7 of 11 subsectors
Canada retail sales rose 1.3% mom to CAD 55.2B in November, well above expectation of 0.0% mom/ That's the seventh consecutive monthly gain, led by sales at food and beverage stores, along with an uptick in e-commerce sales. Ex-auto sales rose 2.1% mom, above expectation of 0.3% mom.
Sales were...
CAD Extended Rally as BOC Sounded Less Dovish
BOC’s January meeting came in less dovish than expected. While leaving the monetary policy measures unchanged, the central bank has upgraded the economic outlook for 2022. Meanwhile, policymakers hinted QE tapering if confidence over recovery improves. At the meeting, BOC kept the overnight rate at 0.25% and the QE...
Sunset Market Commentary
Markets
Sterling grabbed the market spotlights in an otherwise calm trading session. At the onset of European dealings, EUR/GBP hovered around levels seen earlier this week, close to, mostly slightly below 0.89. This initially continued after the release of (marginally) higher than expected UK December inflation (headline rising from 0.3%...
BoC kept rate at ELB of 0.25%, expects strong Q2 rebound
BoC left overnight rate at "effective lower bound" of 0.25% widely expected. Bank rate and deposit rate are held at 0.50% and 0.25% respectively. It will continue with the QE program with CAD 4B per week. BoC expects no rate hike until into 2023, while QE will continue until...
Canadian Inflation Rate Edged Lower in December
Canada CPI growth slowed to 0.7% year-over-year
Food price growth decelerated
Lower inflation leaving the BoC free to keep interest rates low
Canadian consumer price growth slowed in December - to 0.7% compared to a year ago versus 1.0% in November. Weak demand for transportation continued to weigh on...
Canadian Inflation Edges Lower in December to Just 0.7%
Canadian consumer price inflation slowed to 0.7% year-on-year in December, down from 1.0% in November.
The slowdown was broad based, with five of the major categories decelerating in the month. Clothing and footwear prices led the slowdown, with prices down 3.4% relative to a year ago (from -2.3%...
Euro Down Again as Recovery Lost Momentum, Commodity Currencies Jump
Euro weakens notably today as recovery momentum diminished quickly. Dollar is not gaining much, though, as commodity currencies trade broadly higher with new wave of buying. Australian Dollar is once again leading others. Canadian Dollar shrugs off weaker than expected inflation reading, and await BoC rate decision and the...
Canada CPI slowed to 0.7% yoy in Dec, below expectations
Canada CPI slowed to 0.7% yoy in December, down from 1.0% yoy, missed expectation of 1.0% yoy. CPI common dropped to 1.3% yoy, down from 1.5% yoy, missed expectation of 1.5% yoy. CPI median dropped to 1.8% yoy, down from 1.9% yoy, missed expectation of 1.9% yoy. CPI trimmed...
USD Continues To Slide Amidst Market Optimism
The USD continued its slide against a basket of other currencies yesterday, as the market mood was more risk on and US Treasury Secretary Yellen’s confirmation hearing before the Senate yesterday tended to reaffirm that. Yellen urged lawmakers to act big on coronavirus stimulus as was expected, and played...
Stocks Climb, Dollar Slips As Yellen Makes Case For More Stimulus
Stocks power higher after Yellen calls for more big spending to fight pandemic
Risk assets rally ahead of Biden inauguration as reflation trade boosted
Dollar under renewed selling pressure, gold capitalized
Yellen talks up big spending
Risk appetite was riding high on Wednesday after Treasury Secretary nominee Janet Yellen reignited...
Canadian Dollar Rises Ahead Of The BOC Decision
The euro bounced back today after relatively strong economic data from Europe. In Germany, survey data by ZEW showed that the current conditions improved from -66.5 to -66.4 in January. The economic sentiment increased from 55.0 to 61.8. In the Eurozone, the economic sentiment rose from 54.4 to 58.3,...
Canadian Dollar in Spotlight, With Eyes on BoC and Oil Price
Canadian Dollar is a main focus today with BoC rate decision featured. Recent strong risk-on markets haven't given the Loonie much lift. It's upside is somewhat capped as oil price turned into consolidation after last week's spike. Also, traders turned cautious before BoC's indication on the chance of a...
EUR/CAD in recovery ahead of BoC, downside breakout still expected
BoC rate decision is a major focus today. It's widely expected to keep overnight rate unchanged at 0.25%. The size of the asset purchase program will also be held at CAD 4B per week. Focuses will be on Governor Tiff Macklem's guidance on the chance of a "micro rate...
Canada’s Manufacturing Sector Pulls Back in November
Canadian manufacturing sales declined 0.6% (m/m) in November. This was somewhat steeper than Statistics Canada's preliminary estimate of a 0.4% contraction. In addition, the advance in October was revised down to 0.2% (previously reported as +0.3%). The release leaves the level of manufacturing sales around 3.8% below its...
Currency Pair Of The Week: USD/CAD
Joe Biden will be sworn in as President of the United States in Wednesday, however this is more likely to be a ceremonious event than a market moving event for traders. There are other events this week that are more likely to influence the US Dollar, one of which...
Canada: Homebuilding Pulls Back But Remains firm in December
Housing starts dropped 12.6% m/m in December to a still-strong 228.3k units. This level was achieved without CMHC conducting their survey in the Kelowna CMA due to COVID-19. Excluding the Kelowna CMA from the growth calculation, starts decreased by a similar 12.2%, and CMHC indicated that the temporary omission...
Bank of Canada: Opening the Door for a Rate Cut
The BoC will conclude its policy meeting at 15:00 GMT Wednesday and there are some whispers in market circles about a ‘micro rate cut’. Covid infections have risen, the economy is losing momentum because of the lockdowns, and the vaccine rollout is progressing slowly, so a solid case can...
Commodity Currencies Stay Generally Weak While Euro Could Stabilize Temporarily
Commodity currencies remain generally weak today on mixed market sentiments. On the other hand, Yen, Swiss Franc and Dollar are the strongest. Euro remains soft too, but recovery in crosses, in particular against Sterling, is limiting its downside for the moment. Gold also stabilizes back in prior range after...
BOC Preview – All Eyes on Likelihood of Micro Rate Cut
BOC is widely expected to leave its overnight rate at the effective lower bound of 0.25% in January. The size of asset purchases will also stay unchanged at CAD4B/week. Over the past month, there has been market speculations about the possibility of a micro rate cut since November. While...
The Weekly Bottom Line: New Year, New Stimulus
U.S. Highlights
President-elect Biden unveiled a proposal for a new relief package this week. The $1.9 trillion plan includes additional one-time stimulus checks, unemployment benefit supplements and funding for state and local governments.
Additional fiscal support will help bolster a faltering economy. Initial jobless claims rose by 181k last...
Forward Guidance: BoC to Flag Medium-Term Optimism, Near‑Term Concern
The Bank of Canada’s first rate decision of 2021 is expected to yield no change to its policy stance with the overnight rate holding at 0.25% and the quantitative easing program intact. Along with the rate decision, the Bank of Canada will publish the Monetary Policy Report which will...
Week Ahead – ECB, BoJ and BoC Meet But All Eyes on US Capitol
The first of the new year’s central bank meetings will get under way next week and it will be a heavy schedule on the data front as well. The European Central Bank, Bank of Japan and Bank of Canada will almost certainly be debating the latest setback to the...
CAD to Gain Further On Risk Appetite and Higher Crude Oil Price, Upside Limited by BOC Actions
Similar to Australian dollar, Canadian dollar this year should continue to benefit from broad-based USD weakness, global recovery, and rebound in commodity, in particular crude oil, prices. However, with the US as its largest trading partner, BOC should track the Fed’s monetary policy closely, and avoid excessive appreciation of...
The Weekly Bottom Line: A Turbulent Start To A Hopeful Year
U.S. Highlights
Unprecedented events rocked the U.S. Capitol this week. Ultimately, Congress certified Joe Biden as the next President and President Trump agreed to a peaceful transition of power.
The Democrats took control of the Senate by prevailing in both Georgia runoff elections. With all three levels of government...
Forward Guidance: Virus Resurgence Will Temper Optimism Among Canadian Businesses
We look for the Bank of Canada’s quarterly Business Outlook Survey (BOS) to reiterate that the near-term economic background remains challenging albeit more for some businesses than others. The survey was likely collected from mid-November to mid-December as virus containment measures were being re-imposed across Canada, and those measures...
US NFP Not So Bad; Canadian Employment Change Even Better: USD/CAD
The US Non-Farm Payrolls reports showed that the US economy lost 140,000 jobs during the month of December vs an expectation of +71,000. However, the revision to the November print was +336,000, and increase of 91,000. Because of the revision, the NET NFP number for December was -49,000. Therefore,...
Sunset Market Commentary
Markets
This morning in Europe, trading still mainly followed the same themes that dominated activity the previous days. The reflation story/hope kept European equities well supported, even as the pace of the rally slowed a bit. German production and foreign trade data for November were reasonably OK and suggest that...