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Canada’s Economy Grew Through Second Virus Wave

GDP surged 9.6% (annualized) in Q4 of 2021 Pace of growth slowed to 0.1% in December but bounced back to 0.5% in January Second wave containment measures weighed on hospitality/retail sectors, but the rest of the economy continues to grow Huge household savings stockpile to support further recovery...

Euro Indices Mixed on WHO Warning

After a stellar session on Monday that saw the S&P enjoy its strongest day of gains in nine months, Europe opened on the defensive. Warnings over asset bubbles from Chinese officials, fresh concerns over Covid numbers and dismal German retail sales figures all briefly weighed on sentiment. However, cautious...

ECB Lagarde: The coronavirus is a double economic shock

ECB President Christine Lagarde said in a speech, "the coronavirus is a double economic shock". Its effect "hit activity extremely hard" but it has also "accelerated structural changes that will transform our lifestyles and our economies." "According to some estimates, the pandemic has brought forward the digital transition in Europe...

Forward Guidance: Canada GDP to Confirm Economy Weathered Second Wave

We expect GDP rose 7.5% at an annualized rate in Q4 of last year, on the back of a 0.3% increase in December output (in line with Statistics Canada’s preliminary estimate a month ago.) That would mean about 80% of the collapse in activity last spring was retraced by...

Positive Vaccine News Keep Ticking In

Market movers today Another day with mostly tier-2 data releases. In Sweden, the NIER survey is due out. In the US we get weekly jobless claims data and core capex data for January. A lot of FOMC members are also speaking tonight but they are unlikely to say anything...

GBP/USD Holds Above 1.40 As UK Prepares For Lockdown Easing

The pound remains on the front foot ahead of Boris Johnson’s highly-anticipated speech to unveil 'cautious' plan to lift England's lockdown. Much of the details have already been leaked ahead of a news conference at 19:00 GMT. So, the announcement itself is unlikely to offer any fresh impetus for...

European Open: US Vaccinations To Rally From Here?

Biden think's he'll beat his own vaccine rollout target, copper and Asian indices are higher and forex awaits a catalyst. President Joe Biden remains confident that the US can exceed his target of achieving 100 million vaccinations within the first 100 days of his presidency. And so he should be...

Weekly Economic & Financial Commentary: Q4 GDP Data Top Expectations, but Q1-2021 Looking Shakier

U.S. Review A Consumer and His Stimulus Check Are Soon Parted Stimulus checks from the year-end COVID-relief package arrived in January, and we learned this week that retailers raked in more money during that month than they have since June. Every single store category reported increasing sales during the month....

Forward Guidance: Canadian Business Investment Intentions to Show Two Gear Economy

Divergence between the hospitality sector and the broader economy has been a key theme in recent months. Next week’s release of (the usually closely watched) annual investment intentions survey from Statistics Canada will likely show a similar divergence. The Bank of Canada’s Q4 Business Outlook Survey already flagged a...

Week Ahead: Powell vs Inflation

Inflation and inflation components of economic data were sharply stronger last week than in previous months.  Yet, one central bank speaker after the next continued to march out and say that inflation is nothing to worry about.  This week, Fed Chairman Powell will be front and center, as he...

Sunset Market Commentary

Markets The reflationary spirits were already wide awake during this morning’s Asian session and spilled over into European dealings without much ado. Investors put comfort from mostly better-than-expected growth figures as revealed by Japan overnight, showing they have become more resilient to the coronavirus measures. Second, and more importantly, the...

Weekly Economic & Financial Commentary: Mixed Finish to 2020, Soft Start to 2021

U.S. Review Inflation Comes Back in Focus Market attention was concentrated on the January consumer price data, as inflation has come back into focus. There is renewed concern among market participants that inflation is about to take off once the economy re-opens and demand accelerates. But, such concerns have not...

The Weekly Bottom Line: Moving In The Right Direction

U.S. Highlights The headline Consumer Price Index rose 0.3% in January and was up 1.4% year-on-year. Removing food and energy prices, the core index was flat on the month and slowed to 1.4% year-on-year from 1.6% in December. Small business optimism deteriorated for the third month in a row...

Week Ahead: Holidays, Lockdowns, Inflation and Platinum

It’s the Chinese Lunar New Year:  the year of the ox!  However, restrictions are in place to prevent people from traveling over the holiday. Lockdowns are still in full swing in many countries while monetary and fiscal stimulus continue to hold up fragile economies, especially in Europe.  While many...

Forward Guidance: Flurry of Indicators to Highlight Resilience Through Second Wave

The Canadian economy (outside of the hospitality sector) continued to show resilience through the second wave of lockdowns as households and businesses adapted to tighter restrictions. The more narrowly imposed containment measures this time around, which left the industrial sector and other businesses outside the hospitality and retail sectors...

Weekly Focus – Strong Earnings Season Despite COVID Headwinds

A fairly undramatic week is coming to an end where focus continued to be on COVID vaccine and treatment news on top of US fiscal stimulus and the corporate earnings season. Bond yield fell back a bit after US core inflation for January came out weaker than expected at...

Dollar Decline Slowed Again in Quiet Trading, UK in Focus

Dollar's selloff slowed further in a very quiet Asian session, on lunar new year holiday. Activity might come back with a number of economic data featured from the UK. Upside surprises there could add to the upbeat outlook as painted by BoE chief economist. As for the week, the...

BoE Haldane: A decisive corner is about to be turned

In Daily Mail article, BoE chief economist Andy Haldane said the "rapid rollout of the vaccination programme" means "a decisive corner is about to be turned for the economy too, with enormous amounts of pent-up financial energy waiting to be released, like a coiled spring." "People are not just desperate...

Frank First Biden-Xi Call But Also Hope For Increased Dialogue

Market movers today We will keep monitoring news on vaccine efficacy and production capacity. Lots of studies are released these days. Today the calendar is very thin on data. We will keep an eye on US jobless claims in the afternoon. Sweden also releases unemployment figures from PES. The 60...

Euro Pauses after Recent Ggains

The euro has posted small gains in the Wednesday session. Currently, EUR/USD is trading at 1.2130, up 0.10% on the day. Euro gaining ground EUR/USD lost close to 1% last week and crossed below 1.20, a psychologically important line. However, a disappointing US nonfarm payrolls report was just what the doctor...

More Positive Vaccine News

Market movers today We will keep monitoring news on vaccine efficacy and production capacity. Lots of studies are released these days. Today is another very quiet day on the data front. Chinese CPI is released overnight. Consensus looks for a drop to 0.0% in January from 0.2% in December....

Sunset Market Commentary

Markets It was a rather dull European start to the trading week following an exciting end last week, but things turn more vibrant as US dealers enter. The eco calendar was empty bar outdated December German industrial production data, which didn’t impact markets. German production is losing momentum (0% M/M),...

Weekly Economic & Financial Commentary: International Growth Outlook Still Mixed

U.S. Review Better Numbers Nonfarm employment rebounded in January, with employers adding 49,000 jobs following the prior month's 227,000-job drop. The annual revisions to the prior data provide a more accurate assessment of job losses during last spring's lockdown, as well as the subsequent recovery. Job losses in March and...

The Weekly Bottom Line: A Cautiously Optimistic Week

U.S. Highlights Economic data released this week was balanced enough to re-ignite optimism in financial markets without calling into question the next fiscal support package. Job market data showed a third consecutive decline in the weekly jobless claims as well as moderate progress in payrolls and an unexpected drop...

Forward Guidance: Gradual Easing in Restrictions to Brighten Economic Growth Outlook

Next week will be a quiet week for economic data releases and much of the focus will be centered on reopening plans. Steadily declining COVID case counts across most regions of Canada have already resulted in some easing in containment measures and we expect this will continue. Even as...

Week Ahead: Is the Focus on Stimulus or Inflation?

Markets were back to their old selves last week, as the short squeeze drama surrounding GME subsided. Joe Biden seems to be off to a good start as US President,  as his $1.9 trillion stimulus proposal makes its way through Congress. US Non-Farm Payrolls were in line with expectations,...

Weekly Focus – Light at the End of the Tunnel Increasingly Brighter

On the COVID front most European countries are seeing improvement but governments across Europe are walking a tightrope where cases will likely rise again if restrictions are eased. Most analysis so far have found that the vaccines are effective against new variants - and close to 100% efficacy against...

Cliff Notes: Extraordinary Policy Easing Justified Despite Strong Global Recovery

Key insights from the week that was. For Australia, the past week had a strong focus on monetary policy as the RBA Board met; Governor Lowe spoke at the National Press Club then appeared before Parliament; and lastly, the February Statement on Monetary policy was released. Tuesday’s RBA decision provided an...

Stronger Sterling As Vaccinations Move Ahead

Market movers today US non-farm payrolls are expected to increase around 100k. The labour market is still suffering from weakness in the service sector, where most of the jobs are and have been lost as well. The labour market will be challenged until the economy can open up fully...

Upbeat RBA Could Lift Aussie, But All Eyes on Stocks

The Reserve Bank of Australia (RBA) will wrap up its latest meeting at 03:30 GMT Tuesday. No policy changes are on the menu, so any reaction in the aussie will come down to the signals in the accompanying statement and Governor Lowe’s tone. The economy has performed much better...