Focus on FOMC minutes and Canadian retail sales – BBH
|Analysts at BBH suggest that the focus in the US is on the FOMC minutes, before which January existing home sales will be reported.
Key Quotes
“A small gain after a 2.8% decline in December is expected. In some ways, the FOMC minutes have been superseded by Yellen's recent testimony and the comments by numerous officials, including Fischer and Dudley. Our general takeaway is that mid-March may be too soon, but June is too long. The prospect of a May move is increasingly appealing.”
“In terms of other issues, there is still a lack of clarity on fiscal policy, but this is normal and will likely be clarified in the coming period, with some insight likely from Trump's speech to Congress next week. The balance sheet discussions appear very preliminary. Yellen suggested in her testimony that she does not want use reducing the balance sheet to affect the broader economy (that is as a policy tool). The discussions will evolve over the course of the year.”
“Canada reports December retail sales today. Soft auto sales may weigh on the headline, where a flat report is expected after a 0.2% increase in November. However, excluding the auto sector, a 0.5% rise is expected. Oil prices closed at eight-week highs yesterday, but the Canadian dollar is finding little succor. The US dollar continued to recover from the successful test on CAD1.30 last week. The month’s high is a little above CAD1.32 and offers a nearby cap.”
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