Weekly Market Update
Risk Management Solutions Group
June 12, 2017
RANGE OF THE WEEK: 1.3350 – 1.3600
Last week was filled with unexpected developments that had major consequences on the outlook for the global economy.
On Thursday, the British Conservative Party, led by Theresa May, was re-elected to steer the United Kingdom through the
tough Brexit negotiations with the member nations of the European Union. However, the majority that the Tories held in
Parliament before the election slipped through their hands, with a loss of 12 seats. This disastrous showing could haunt the
rest of May’s mandate as Prime Minister. Unable to unite her party, which had started off the campaign with a huge lead
against an adversary that she had called unable to lead a country, the Member for Maidenhead will now have to face calls
for her resignation from her party and a weakened position to launch Brexit negotiations. Given all this uncertainty, the
pound sterling (GBP) lost close to 2% the day after the election against the U.S. dollar.
1.3100
GBP/USD
1.3050
1.3000
1.2950
1.2900
1.2850
1.2800
1.2750
1.2700
May 9, 2017
May 23, 2017
June 6, 2017
Source: Bloomberg as of June 12, 2017
Closer to home, U.S. President Trump was accused by former FBI Director James Comey of lying to the American people
when he explained the reasoning for firing him. Under oath, Comey explained that Trump allegedly dismissed him after he
refused to drop his investigation into Michael Flynn, Trump’s National Security Advisor, and exonerate his administration
of any wrongdoing with regard to communications with the Russians during the election campaign. This contradicts Trump,
who had explicitly mentioned a letter from the Deputy Attorney General as the reason for dismissing Comey. Since these
revelations had already by and large made the headlines thanks to reporting from the New York Times and the Washington
Post, stock markets were not particularly adversely affected. Nevertheless, uncertainty regarding whether the government
will be able to carry out its agenda and Trump’s potential impeachment remain considerations.
The most important economic news of the past week was Canadian job data. The less dovish tone regarding the economy
adopted by the Bank of Canada (BoC) to explain its decision to hold steady on its key rate at the last meeting was
therefore proven to be a wise move on Friday. The Canadian labour market added 54,500 jobs in May, or almost 40,000
more jobs than analysts’ consensus and more than 50,000 more positions than in April. All of the new jobs were full-time,
and the private sector saw its most solid gains in two years. These impressive results increase the likelihood that the BoC
will raise its key rate sooner rather than later. In other central bank news, European Central Bank President Mario Draghi
announced that he would keep the ECB’s key rate unchanged, citing disappointing inflation numbers.
This week, we’ll be paying close attention to the Federal Reserve’s key rate decision, with the vast majority of analysts
expecting an increase despite the recent lacklustre U.S. job and GDP readings. On our side of the border, no major
economic announcements are on tap.
Wishing you a good week!
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Weekly Market Update
Expected
Prior
US 06/13 PPI Final Demand MoM
0.0%
0.5%
1.50%
US 06/14 CPI MoM
0.0%
0.2%
1.25%
US 06/14 Retail Sales Advance MoM
0.1%
0.4%
1.00%
US 06/14 FOMC Rate Decision
1.25%
1.00%
0.75%
US 06/15 Empire Manufacturing
5.0
-1.0
US 06/15 Industrial Production MoM
0.0%
1.0%
US 06/16 Housing Starts
1218k
1172k
COMMODITIES
FX
ECONOMIC RELEASES
Current
Wkly Chg
% Chg
USDCAD
1.3437
-0.0036 ↓
-0.3%
EURCAD
1.5081
-0.0082 ↓
-0.5%
EURUSD
1.1224
-0.0030 ↓
-0.3%
GBPCAD
1.7022
-0.04 ↓
-2.1%
CADJPY
81.770
-0.2100 ↓
-0.3%
CADCNY
5.0594
+0.0165 ↑
0.3%
AUDCAD
1.0139
+0.0052 ↑
0.5%
CADCHF
0.7201
+0.0039 ↑
0.5%
Current (USD)
Wkly Chg
% Chg
Crude Oil- WTI (bbl.)
46.50
-0.90 ↓
-1.9%
Diesel - HO (gal.)
144.90
-1.03 ↓
-0.7%
Nat.Gas - NYMEX (MMbtu.)
3.05
+0 ↑
2.4%
Gold (t oz.)
1,267.60
-12 ↓
-0.9%
Corn (bu.)
3.81
+8 ↑
2.1%
1.40
EQUITIES
0.25%
0.00%
Jan‐16
Apr‐16
Jul‐16
1.55
USDCAD
1.30
1.45
1.25
1.40
1.20
Jun-'16 Sep-'16 Dec-'16 Mar-'17
1.35
Jun-'16
65$
1,500
Crude Oil (WTI)
Oct‐16
Jan‐17
Apr‐17
EURCAD
1.50
Oct-'16
Feb-'17
Gold
1,400
55$
1,300
45$
1,200
1,100
35$
Jun-'16 Sep-'16 Dec-'16 Mar-'17
Soya (bu.)
9.35
+13 ↑
1.4%
3.03
+3 ↑
0.9%
Current
Wkly Chg
% Chg
2,400
S&P TSX
15,473
+63 ↑
0.4%
2,300
S&P 500
2,432
-4 ↓
-0.2%
2,200
Dow Jones
21,272
+88 ↑
0.4%
2,100
Euro Stoxx
3,550
+102 ↑
3.0%
2,000
VIX
11.7
+2 ↑
16.2%
2,500
INTEREST RATES
0.50%
1.35
Wheat (bu.)
Canada Bonds
US: FOMC Rates Decision
1,000
Jun-'16 Sep-'16 Dec-'16 Mar-'17
S&P 500
16,000
15,000
14,000
1,900
Jun-'16 Sep-'16 Dec-'16 Mar-'17
US Bonds
CA
Wkly Chg
US
Wkly Chg
O/N
0.50%
+0.0 bps
1.00%
+0.0 bps
Prime
2.70%
+0.0 bps
4.00%
+0.0 bps
2Y
0.77%
+3.0 bps
1.37%
+4.1 bps
5Y
1.00%
+1.1 bps
1.81%
+3.3 bps
7Y
1.20%
+1.0 bps
2.07%
+2.2 bps
10Y
1.47%
+0.8 bps
2.26%
+2.6 bps
30Y
2.09%
+1.3 bps
2.91%
+2.4 bps
S&P TSX
13,000
Jun-'16 Sep-'16 Dec-'16 Mar-'17
4.00%
Bond Curves
3.00%
2.00%
1.00%
Canada Bonds
US Bonds
0.00%
2Y
5Y
7Y
10Y
30Y
Source: Bloomberg as of June 12, 2017
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Risk Management Solutions Group
MONTREAL INTEREST RATES
514-394-6885
MONTREAL FX
514-394-8282 and 514-394-6910
Alexandre Lemieux
Managing Director
[email protected]
Salim Laaroussi
Director
[email protected]
Rana Karim
Director
[email protected]
Simon Devost Rivard
Director
[email protected]
Olivier Cosialls
Director
[email protected]
Emmanuel Tessier-Fleury
Director
[email protected]
Mikael Roger-Tessier
Associate
[email protected]
Mariane Lafleur
Associate
[email protected]
Mark Donohue
Director
[email protected]
Julien Duquette
Associate
[email protected]
Catherine Lévesque-Roussel
Associate
[email protected]
Stéphane Goulet
Director
[email protected]
MONTREAL COMMODITIES
514-394-4556
TORONTO FX AND INTEREST RATES
416-869-8900
CALGARY FX
403-440-1126
Philippe Shebib
Associate Director
[email protected]
Alan Andree
Director – Interest Rates
[email protected]
Natasha Robillard
Director - FX
[email protected]
George Androulidakis
Managing Director
[email protected]
Sarah Gauthier
Associate
[email protected]
Ardith Haynes
Associate Director - FX
[email protected]
Christina Yang
Director - FX
[email protected]
Kelvin Ng
Associate
[email protected]
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