Will the Loonie get a more uniform price action this week? Let’s take a look at the catalysts that might affect the comdoll over the next couple of days.
CPI and retail sales (Mar. 22, 8:30 am GMT)
Annualized consumer prices only inched 1.4% higher in January, slower than the 2.0% growth we saw in December and the 1.5% increase that analysts had expected. Heck, it’s the lowest reading in 14 MONTHS!
As it turned out, cost of energy and services slowed down and temporary factors that boosted the consumer price index (CPI) in December had faded. The Bank of Canada (BOC)’s annual core inflation, which excludes volatile items, popped up by 1.5% against the 1.7% gain in December.
This time around, analysts are seeing a 1.5% increase in the annualized CPI. The monthly reading is also expected higher, this time by 0.6% after January’s 0.1% increase.
The back-to-back special will also feature Canada’s retail sales data, which fell by 0.1% in December. If y’all recall, that was already better than the 0.9% decline we saw in December and the 0.3% decrease that analysts had expected.
The annualized reading fared a bit better with its 1.7% gain after already rising by 0.5% in November.
This week, analysts are expecting the retail data to show a 0.4% gain for the month of January. Meanwhile, the core figure – which excludes volatile items like auto sales, is expected to increase by 0.2% after falling by 0.5% in December.
Recall that the Bank of Canada (BOC) recently warned of the “increased uncertainty” in its rate hike schedule, a change of tone from its hawkish rhetoric last year. If this week’s data releases come in significantly weaker than many are expecting, then we might see the Loonie edge lower across the board.
Crude oil updates
If you missed the Loonie’s price review from the previous week, then you should know that the Loonie received support from oil prices rising on the back of improved risk sentiment and expectations of production cuts by major crude oil producers like Saudi Arabia and Venezuela.
Can the Black Crack extend its rallies this week? A report printed over the weekend reflected that OPEC and friends have achieved only 86% conformity with their agreed 1.2 million barrels per day output cut plans.
While it’s only a bit better than January’s 83%, Saudi’s Energy Minister Khalid al-Falih is confident that the “OPEC+” group “will catch up very soon.” Not only that, but he also hinted that the output cuts might be extended beyond June and that we might hear about it in May or in June.
Over the next couple of days we’ll see reports such as the American Petroleum Institute’s (API) weekly U.S. oil supplies update, EIA’s weekly oil stockpiles data, and Baker Hughes’ weekly U.S. oil rig count report.
Oh, and don’t forget to keep close tabs on any headlines that might affect risk sentiment!
Since we won’t be seeing top-tier reports from Canada until the end of the week, the Loonie will likely take its cues from top-tier reports from other major economies and market risk appetite.
Missed last week’s price action? Read CAD’s price recap for March 11 – 15!