Friday February 22nd, 2019

C$ is weak this morning despite oil and base metals rising to new highs on news that the Bank of Canada will maintain a low rate policy. BoC Chief Poloz spoke yesterday of the need to stop raising rates due to economic uncertainty. The market now believes the chance of a BoC rate increase this year is 20%. Canadian retail sales numbers are due today. They have been weak the last couple of months and are expected to be weak this morning. Any strength in retail numbers or oil prices should help C$ higher, but its hard to overcome a Central Bank that wants a weaker currency.

The US$ is showing renewed strength yesterday continuing into this morning on strong job numbers. Look for more strength today. There are no US economic numbers due today however there are six more Fed officials speaking expressing their views on rates and the economy. The market will be listening but don’t expect anything substantive from those speeches.

EUR and GBP are both weak this morning. Prime Minister May’s trip to Brussels looking for flexibility in Brexit terms did not go well. Rumours are that a three-month extension might be granted to resolve Ireland’s border issue, which is the major stumbling block. PM May is also dealing with rebels in her party demanding that Britain doesn’t leave without a deal but are providing no popular solutions to the impasse. Look for EUR to continue to weaken today.

Key Economic Numbers:                    Forecast   Previous

CAD Retail Sales – Yearly (Dec)              0.4%         0.5%

 

  • Drummond Gill