Major News This Week : August 26th, 2013

The U.S Federal Reserve report, published last week, had the expected results in terms of volatility on the overall markets on Wednesday afternoon. Several members of the FOMC have suggested that bond purchases should decline by the end of 2013. This injection of capital in the economy is currently at 85 billion per month. Retail sales in Canada fell at 0.6% in June. The economic slowdown in Canada and the strengthening of the U.S. dollar against most currencies had a negative impact on the loonie. In fact, our currency lost nearly 2% in a week. Last Thursday, the PMI manufacturing in China was reassuring with a level of 50.1 instead of 48.2 expected by the analysts. Have a good week!

The Loonie
“A man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them.” John C. Maxwell

The growing tensions in Egypt and the Middle East are sure to sow doubts regarding the functioning of the oil supply in the region. Egypt is not a major exporter but it controls the Suez Canal, a major pipeline network and is located in the heart of the flow of crude oil from Africa and the Gulf. Since the beginning of this crisis, the price of Brent crude oil (oil from the North Sea) and WTI (light sweet crude) remain at relatively high levels. Since July, the price of our WTI continues to catch up with those of Brent in reducing the gap between the two (See graph). The new light crude transport infrastructures by pipeline, from Canada and the northern U.S., to refineries in the Gulf of Mexico have been operating at high levels for several months and have helped in reducing Brent demand and increasing WTI prices. If the trend continues, knowing that the U.S is the second largest country consumer of oil (18M barrels per day, China is the first with a consumption of 18.7m / B day), the price of our WTI will continue its momentum.

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