Weekly Outlook: Thin Schedule Offers Little In Directional Bias

This weeks schedule of data doesnt look any better as traders can only anticipate three fully scheduled economic release alerts.  As little and light as they be, the figures will play an important role in current speculation as interest rate decision still dominant the landscape.  With the Bank of Canada already turning skeptically dovish and suggestive of no further rate hikes, any report that purports further inflationary pressure will ikely add to possible hike speculation.  As such, both industrial product and raw material price indexes will be of increasing importance.  For the month of May, industrial product prices are expected to increase only slightly by 0.1 percent, a cold followup to the 1.3 percent increase seen last month.  Although lower, the figure continues to be supportive of price increases as the report continues to be on the positive side.  Raw materials prices are additionally expected to rise a whole percentage point after increasing 5.7 percent in the month of April.  Still bent on higher commodity prices, the dip is likely reflective of the stable pricing seen in the month after hitting record prices earlier in the year.  With both reports likely to continue the inflationary trend, market focus will turn to underlying expansion in the worlds ninth largest economy.  Ultimately, this will turn the attention to the monthly gross dometic product report set for release on Thursday.  Estimated to have climbed 0.1 percent, the results are likely to be consistent with previous reports of similar results in prior months.  This will add to confirmation of the pace of growth in the Canadian economy, bolstering earlier estimates of acceleration to a 3.3 percent pace.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The previous weeks schedule of data was definitively thick with key releases, all of which did nothing in providing any real directional bias for the currency pair.  Sparking off the beginning of the week was positive interest in Canadian securities by foreign investors.  Seen mostly in fixed income instruments, the international securities transactions surplus rose to C$3.895 billion.  Higher than the previous figure of C$3.325 billion, the release trumped survey estimates and continues to show a strong bias for Canadian based assets by global parties, feeding a larger current account surplus.  All good and gravy, traders targeted consumer price index and retail sales reports on the week, subsequently.  Mostly transparent, the reports would offer a more concrete insight into the health of the Canadian economy through consumer consumption.  Raising estimates of near term rate hike, core consumer prices rose a whopping 2 percent on the annualized comparison.  Definitively above estimates, the figure couples nicely with the recently optimistic retail sales figures in boosting rate hike bias.  For the month of April, consumers returned to the stores in full force, continuing the trend of rising consumption by 1.9 percent on the core measure.  Throw in the leading indicators report and youll see why the market continues to price in a possible rate hike as evidence purports a healthy economy that may need preemptive inflationary curbing.  All in all, the weeks reports definitely give central bankers something to think about when they convene again this summer.

Economic Releases for June 26^th June 30th