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Economic calendar: Will Bank of Canada surprise the markets?

Summary:

  • US PPI inflation expected to tick higher in June

  • Bank of Canada widely anticipated to deliver a 25 bp rate hike

  • Consensus suggests DOE report will confirm decline signalled by API yesterday

The relative calmness seen in the past few days has been disrupted overnight by Donald Trump signalling new tariff list. While this theme may steer the markets investors should be aware that today’s calendar brings some noteworthy releases. In the early afternoon US PPI inflation figures are scheduled for release. This reading may have higher significance than usual as it comes a day ahead of the CPI numbers. Apart from that, an increased volatility may be spotted on CAD today as BoC will make its decision and weekly DOE oil inventories data will be released (Canada is a major oil producer).

1:30 pm BST - US, PPI Inflation for June. Unlike the previous month this time investors will be offered the US producers inflation reading one day ahead of the CPI data. In MoM terms PPI inflation is expected to decelerate from 0.5% in May to 0.2% in June. However, on the year-over-year basis it is expected to tick higher from 3.1% to 3.2%. The core measure is forecasted to move from 2.4% YoY in May to 2.6% YoY in June. In case a major acceleration will be spotted tomorrow’s CPI figures may also push higher reflecting the passage of higher input costs onto consumers.

3:00 pm BST - Bank of Canada interest rate decision. Canadian central bankers are widely anticipated to increase main interest rate from 1.25% to 1.5%. Given that the market odds for a rate hike currently stand at 97% it would be a huge disappointment if BoC decides to leave the benchmark rate unchanged. As the potential hike is almost fully priced in an initial market reaction should not be significant. What may move the markets is the post-meeting conference of Governor Poloz scheduled at 4:15 pm BST.

3:30 pm BST - Crude Oil Inventories. Oil ticked higher yesterday after API released its weekly oil stocks data. Let us recall that inventories declined by 6.8 mb. According to mediane estimate of economists surveyed by Bloomberg today’s DOE report should show a 3.9 mb decline in the US inventories. Oil traders should be on guard today as monthly OPEC report is scheduled for release at 12:20 pm BST therefore additional volatility may surface.

Central bank speakers scheduled for today:

  • 8:00 am BST - ECB President Draghi

  • 8:30 am BST - ECB’s Praet

  • 1:00 pm BST - ECB’s Mersch

  • 4:30 pm BST - ECB’s Nouy

  • 4:35 pm BST - BOE Governor Carney

  • 9:30 pm BST - Fed’s Williams

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After a two week long correction USDCAD pushed higher at the beginning of this week. The pair is trading now at the 61.8% retracement level of the major slump started in May 2017. This Fibo level is additionally strengthened by the 8- and 21-day moving averages therefore bulls may have a hard nut to crack. Source: xStation5

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