Friday February 15th, 2019

The US$ retests the monthly highs this morning and is poised to break through to new levels not seen in two years. Despite weak economic numbers the US is not only outperforming Europe and China economically, but also appears more politically stable. There are some important economic numbers due but look for US$ strength to continue today.

The C$ fell to a new two-week low yesterday on news of a surprising decline in US Retail Sales, before recovering in the afternoon on stronger oil. This morning C$ is holding steady on oil strength and in anticipation of further strong US economic reports that will define US appetite for Canadian exports. Look for some intraday strength going into the holiday long weekend unless there is surprising weakness in the US numbers.

The EUR is weak and testing new lows. Prime Minister May suffered a surprising defeat on a new Brexit vote that contained an Ireland border resolution that appeared to have broad parliamentary support. The disarray is unlikely to be resolved soon and a “hard” Brexit is due in six weeks, so look for more EUR weakness ahead.

Key Economic Numbers:                    Forecast   Previous

US Industrial Production Yearly (Jan)      3.6%         4.0%

US Consumer Sentiment Prelim (Feb)      93.4          91.2

US Capacity Utilization (Jan)                  78.7%       78.7%

 

  • Drummond Gill