It's back to school and work for many Canadians and the least you could say is that markets already have a head start. Crude oil turned in another solid performance on Friday, revisiting the $45 range (+18% in two days) and confirming its close relationship with the loonie. Our currency refuses to gain much altitude, however, given that economic indicators south of the border support the idea of a key rate hike by the end of the year.
Moreover, comments by Fed Vice-Chairman Stanley Fischer, who is acknowledged for his solid credibility, drove up the likelihood of a key rate hike in September from 26% to 38%, with a 49% chance by October. In fact, the conclusion of the annual Jackson Hole retreat, which brings together the Fed's various central bankers, is that they are more concerned with job growth than with financial market turbulence. In short, we still cannot rule out the scenario of a rate hike this year in the United States.
On Friday, we'll see jobs data for August from both sides of the 49th parallel (NFP, employment change). Looking at turbulence overseas, the CNY has gained ground for a 4th straight session this morning and Premier Li Keqiang does not believe there are any grounds for a further decline in the yuan. You could almost ask yourself what's changed since August 10?
Have a great week!
Stéphane Goulet
- Range of the day: 1.3190 - 1.3315