USD/CAD Oil Price Drop Offsets Canadian Housing Prices

The tumble in the price of crude put downward pressure on the CAD that depreciated agains the USD. The USD/CAD rose by 0.146 after analysts cut price forecasts for oil and Fed members were net hawkish for a December interest rate hike. The pair touched six week highs of 1.3341 but has given some of the gains back to trade at 1.3290 ahead of the end of trading on Thursday.

The Canadian New Housing Price Index (NHPI) came in under expectation but still a positive 0.1 percent gain in September. Vancouver and Toronto were the main drives of growth with 0.4 percent and 0.2 percent respectively and were enough to offset losses in other metropolitan areas. The 12 month increase of NHPI was 1.3 percent nationwide, with the Hamilton area rising 3.7 percent year over year.

Fed Speak at Full Force Ahead of US Retail Sales

Five FOMC members were on deck at different venues, but the questions from the market was the same. Will the Federal Reserve hike rates in the December FOMC meeting? The comments were as diverse as the list of speakers: Fed Chair Janet Yellen, New York Fed President William Dudley, St. Louis Fed President James Bullard, Richmond Federal Reserve President Jeffrey Lacker and Chicago Fed President Charles Evans.

Bullard and Lacker both are in favor of raising rates, although Lacker has gone so far as voting for them in the previous FOMC meetings. Dudley repeated the data dependency mantra and regardless on when the American interest rates do go up, they will do so gradually. Evans focused on the employment gains that dispelled doubts about the state of the jobs led recovery. Chair Yellen stuck to the topic of her opening remarks at the Conference on Monetary Policy Implementation in the Post-Crisis Period and did not give any hints towards the upcoming monetary policy meeting in December 16.

Oil Price Lower as Inventories Near 80 Year High

The price of oil fell 2.09 percent after higher inventory data was released. OPEC commentary around higher demand in 2016 was not enough for the price to hold above $42 and fell to a low of $41.78. Venezuelan oil minister Eulogio del Pino said during an interview that the OPEC is planning an informal meeting a day ahead of the official meeting on December 4 in Vienna. OPEC members have seen the fate of their economies crumble at varying degrees since the drop in the price of crude. Saudi Arabia has not been immune to the effect of the global commodity rout and the IMF has suggested deep structural reforms might be needed. Venezuela is in a more dire situation as it awaits parliamentary elections in December and is dependant on oil being priced at $88 to guarantee investment in the sector.

European GDP data, in particular that of Germany and the U.S. retail sales releases will be the main focus of the forex market as investors look for direction ahead of December and hints for the monetary policy decisions of the Federal Reserve and the European Central Bank. Friday does not bring Canadian data, but Bank of Canada’s Deputy Governor Carolyn Wilkins will speak in Toronto on the topic of: Innovation, Central-Bank Style.

CAD events to watch this week:

Friday, November 13
2:00 am EUR German Prelim GDP q/q
8:00 am CAD BOC Senior Deputy Governor Carolyn Wilkins;
8:30 am USD Core Retail Sales m/m
8:30 am USD PPI m/m
8:30 am USD Retail Sales m/m

*All times EST