US Begins Week With Conclusion Of Financial Meetings

The shortened week in Canada will be extremely thin in economic statistics likely to influence the market. The only notable data to be announced on Thursday are: Existing home sales, followed by the Bank of Canada review, a quarterly report on its policies and the Canadian economy.

United States
The week in the U.S. begins today with the conclusion of a two-day meeting of the network of central bankers and finance ministries in Washington. The unveiling of economic statistics continues tomorrow with the retail sales data for the month of October, the producer’s price index of the same month, as well as the minutes of the last Federal Reserve meeting. Economists expect a slight decrease in economic activity for the month of October, considering that the retail sales consensus stands at -0.2%.

Thursday, we will know the consumer price index statistic followed by a speech by Ben Bernanke in Atlanta on the U.S. mortgage market. Let us remember that the last intervention of the Federal Reserve in September (quantitative easing 3) was aimed towards mortgage back securities (MBS). Also on Thursday afternoon, other members of the Federal Reserve will also deliver speeches in the United States on various topics. The week ends with the statistics on industrial production, on Friday.

International
We start off the week internationally today with the always observed German ZEW survey; survey on the economic health of this country. Tomorrow, Britain will unveil its employment data for the month of September. Thursday is a very important day, given the slew of data that is expected. The October eurozone consumer price data will be known, and thereafter, France, Germany, Italy and the eurozone will reveal their third quarter GDP.

We look forward to analyzing the statistics out of Germany, as the latest figures (unemployment rate, industrial production, etc...) were not encouraging. Has Germany lost its immunity to the European storm? This is what we will try to determine in the coming weeks.

The Loonie
“Let us not seek the Republican answer or the Democratic answer, but the right answer. Let us not seek to fix the blame for the past. Let us accept our own responsibility for the future.” John F. Kennedy

The long and hard battle between incumbent President Barrack Obama and his rival Mitt Romney has come to an end. Our neighbours south of the border voted for four more years of Obama! We can finally turn the page on this period of uncertainty and concentrate on the next one… the fiscal cliff.

As mentioned in last week’s column, a Democratic President in the White House is synonymous with risk taking. However, this euphoria in the world’s stock markets and the rise of the Canadian dollar came to an abrupt halt as investors turned their attention back to the cliff.

With Congress still divided (231 Republican seats vs. 191 Democratic seats), Obama may once again find obstacles across his path when he tries to pass some bills. It should be remembered that it was divisions in Congress that paralyzed American politics in the last two years, and now they are making market activity over the coming months difficult to predict.

The following graph compares how the USD/CAD pair (white line) and the S&P 500 (yellow line) reacted to the U.S. elections. As you can see our loonie began to rise soon after the elections, and this continued until North American markets opened.

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