The Data Week Ahead

Last week we were treated to some encouraging news: on Tuesday we learned that Canada’s Gross Domestic Product had grown 1.7% (YoY), which was 0.4% more than expected. This allowed the loonie to continue gaining strength and rise 2% in two weeks. We also learned that Mark Carney’s successor at the Bank of Canada will be Stephen Poloz. The new Governor, who will officially assume his new duties on June 3, has a PhD in Economics from the University of Western Ontario and was the President and CEO of Export Development Canada. In the U.S., the Federal Reserve reiterated its commitment to continue purchasing bonds at a rate of $85 billion per month. In addition, on Friday the markets were pleasantly surprised to hear that the unemployment rate had fallen from 7.6% to 7.5% and that 176,000 new jobs were created in April. Lastly, on Wednesday the European Central Bank lopped 0.25% off its key interest rate, bringing it to 0.5%. Have a great week!

The Loonie
I never had a policy; I have just tried to do my very best each and every day. – Abraham Lincoln

Last week we were treated to a raft of information from the central banks, so we will provide you with a brief review of the week’s events and their impacts on financial markets. First, in the least surprising of the three major news items, the U.S. Federal Reserve decided to leave its key interest rate unchanged. However, there were some notable changes in the wording of the press release. The Fed clearly identified fiscal policy (i.e., the actions taken in Washington) as restraining economic growth, but it did not go so far as to say what should be done to alleviate the situation. Another important change: the Fed mentioned the possibility that monetary easing measures could be increased or decreased in order to attain the institution’s inflation rate and unemployment rate objectives. Since it is easy to read what you want into this, the markets seem to have greeted the news with only a hint of enthusiasm.

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