Following US Markets, Loonie Traded In Narrow 60-Point Range Last Week

Last week the loonie traded in a narrow 60-point range, following the mood in U.S. stock markets. Greece was granted the much-anticipated funding needed to make the payment on December 13, and this news drove up the value of the euro. Here in Canada, disappointing GDP data were released on Friday. We learned that the Canadian economy stagnated in September (0% growth).

It should be remembered that it contracted 0.1% in August. These figures suggest that we are experiencing a slowdown, and, given the fiscal cliff faced in the U.S., we believe that the USD/CAD pair is positioned to gain strength. Speaking of the fiscal cliff, John Boehner, the Speaker of the U.S. House of Representatives, mentioned to the media that no progress had been made in discussions with the President.

Barack Obama would like to secure $1.6 trillion in new tax revenues by raising taxes on the wealthiest Americans, while Mr. Boehner is against any changes to taxes and prefers cutting spending. Their starting positions are therefore very far apart. We still have 20 days before they hit the wall...

Canada
This major week in Canadian news begins tomorrow with the Bank of Canada’s decision on the key interest rate. We are anxious to hear what Mark Carney, our outgoing central banker, will have to say given the recent disappointing statistics in Canada. Is he still considering raising interest rates in the near future? Stay tuned… On Thursday the Ivey Purchasing Managers’ Index will be released, and on Friday we will have employment data. Economists are forecasting that 10,000 jobs were created in November.

United States
The week in U.S. news will be relatively quiet in terms of economic indicators, but each release will be closely scrutinized. The ISM Manufacturing Purchasing Managers’ Index will be released today, followed by Factory Orders and the ADP Nonfarm Employment Change on Wednesday. Friday will be the most important day of the week, with Private Nonfarm Payrolls and the University of Michigan Consumer Sentiment Index. Analysts are forecasting that 90,000 jobs were created last month. This figure is very important, since Ben Bernanke has said that he wants unemployment to reach 6.5% before bringing an end to his quantitative easing program.

International
The week in international news begins today, with Italy’s and Germany’s Purchasing Managers’ Indexes. Tomorrow the Reserve Bank of Australia will reveal its key interest rate decision and the eurozone will announce its Producer Price Index. On Wednesday we will have Australia’s annualized GDP figure for the third quarter and Retail Sales data for the eurozone.

Thursday will be the most important day in international news, with employment data for Australia, followed by third-quarter GDP figures for the eurozone and the European Central Bank’s decision on the eurozone’s key interest rate.

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