At the end of this week Canada will release Consumer Price Index data for the month of February. The Reserve Bank of Canada have been incredibly dovish of late and there is hope that with good retail sales figures from the start of the year that inflation could be on the up. If there is positive inflation results then the RBC may consider looking towards an interest rate hike, however in my opinion they will suggest global uncertainty is still strong.
Retail Sales Jump
January retail sales were released at 2.2% which was 0.9% better than the expected consensus of 1.3%. Canada was victim to poor sales data in December so this came as a welcome relief. Whilst the jump is positive, it’s unlikely that there will be an improvement in the next few months so the markets may not get to excited.
Oil Output Cuts on Hold
After last year’s OPEC cut in oil production there was belief that the price of oil could begin to gain some of the lost ground. The talks, that took place took nearly half a year for everyone to agree on a limited production level, comes to an end in June. If OPEC are unable to come to some agreement then the market repositioning of oil nations could recreate the problems seen at the beginning of last year when a barrel of Oil cost $30.
Canada’s main export is oil and the price has an enormous effect on the economy. Tax revenues were down at the end of last year and if oil did fall again there could be a repeat. A further drop in the price of oil could well see the Canadian Dollar lose significant ground.