Canada: Trade risks remain, lower rates easing housing sector headwinds – RBC


According to Royal Bank of Canada, the two-step-forward, one-step back escalation in US-China trade tensions had a one-step back last week with the Trump administration announcing the 3½-month delay of about 60% of a promised 10% tariff hike on imports from China planned for September 1st. 

Key Quotes

“The move did little if anything to reduce trade uncertainty. And earlier tariff hikes, which disproportionately have been on industrial production inputs, are still in place.”

“We expect Canadian manufacturing sales will start to see more negative spill-over effects over the second half of 2019 as well after generally outperforming in data year-to-date through May.  June Canadian exports were quite soft and we expect that will be reflected in a drop in June manufacturing sales being reported next week as well to retrace a big chunk of a surprisingly large May gain.”

“But another consequence of rising global trade tensions/growth-concerns has been sharply lower interest rates.”

“In Canada, labour shortages are still commonly reported. Wage growth has strengthened. “Core” CPI measures look more likely to tick lower than higher in next week’s July Canadian CPI data, but underlying inflation trends still look like they’re tracking right around the Bank of Canada’s 2% target. And households have looked much less concerned about trade uncertainty than businesses. Consumer confidence is still sitting around cycle-highs in both Canada and the United States.”

“In Canada, housing markets have shown clear signs of stabilizing. We expect June Canadian retail sales next week will show a tick higher, once looking through a price-related pullback in gasoline station sales, after a soft May report that looked like it might have been weather-related.  As in other countries, trade uncertainty remains a legitimately concerning downside risk for the Canadian industrial sector and will weigh on economic growth.  Yet near-term headwinds to the household sector are also looking smaller now than they did just a few months ago.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD flirts with 34-month lows amid after poor German figures, amid coronavirus fears

EUR/USD is trading just above 1.0820, the lowest since 2017, as the coronavirus outbreak is taking its economic toll on Apple among others. The German ZEW Economic Sentiment missed expectations with 8.7 points.

EUR/USD News

GBP/USD bounces above 1.30 as markets shrug off wage figures

GBP/USD is trading above 1.30 as investors ignore weak UK wage figures and Brexit concerns once again. Coronavirus headlines are eyed.

GBP/USD News

Forex Today: Coronavirus takes a bite from the apple, Gold gains, Bitcoin bounces

The coronavirus outbreak's economic impact is growing as Apple, the iPhone maker has issued a warning that it is unable to meet its guidance due to production and issues and closed stores in China. The tech giant's announcement has been weighing on the market mood, pushing gold and the yen higher. 

Read more

Gold: Positive beyond six-week-old falling trendline

Gold prices take the bids above $1585, +0.35%, during the pre-European trading on Tuesday. The yellow metal recently broke a downward sloping trend line stretched from January 08. Early-month top on the buyer’s radar.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex MAJORS

Cryptocurrencies

Signatures