Wednesday February 20th, 2019

The C$ hit a new 2-week high this morning thanks to new highs in crude, gold and base metals and a surprise announcement that Alberta will create a government oil transport company. Alberta plans to spend $3.7 billion to lease 4,400 rail cars and ship 120,000 barrels per day of low-priced shut-in crude by next year. The province has complained about the Federal government’s lack of effort on new pipeline development. Also, the Bank of Canada Chief Poloz is speaking on Thursday. The market will be watching for any change in policy. The BoC will likely keep rates steady given a weak economic outlook despite higher commodity prices. Look for more C$ strength today in anticipation of BoC maintaining a pro-growth policy.

The US$ fell yesterday on a surprisingly strong housing index number. The US$ will likely trade with a downward bias while waiting for the FOMC announcement today at 2pm. Given recent economic numbers the Fed will likely keep a “wait-and-see” policy stance as economic numbers are mixed but looking brighter. For example, today the Redbook Retail sales number will be announced. It has fallen sharply the past 2 months, but Walmart just reported record revenues so there is a chance this number will surprise on the upside. Also, Trump commented that the trade negotiations with China were going well. Equities all over the world rallied on that news.

GBP and EUR rallied strongly yesterday as May heads back to Brussels today with a new Irish border proposal that might be accepted. Three “Remain” Conservatives quit the government in protest. EUR is holding steady this morning, look for more EUR strength later today.

Key Economic Numbers:                    Forecast   Previous

US Redbook – Yearly (Feb)                    –               4.6%

 

  • Drummond Gill