Pain in Energy Markets:
Due to falling natural gas prices, the commodity closed below $3 for the first time since May 24th, 2021. This decline was spurred by increased stockpiles in Europe and America as forecasters predicted mild weather in February.
Major US Economic Data Next Week:
The US economy continues to show resilience despite weak employment and GDP data in the past few weeks. This has led some people, including those at the Federal Reserve, to suggest that a slowdown of the hiking cycle may be necessary. However, there are still some reasons for caution as seen in recent economic indicators such as falling residential construction, industrial production declining for three months straight, and weaker retail sales over a two-month period.
USD/CAD Vulnerable to Further Losses:
Rephrase The Canadian dollar strengthened against the U.S. dollar on Thursday, reaching its highest level in more than two months after rising stock markets and after the Bank of Canada signaled that it is not planning to cut interest rates anytime soon.
Rephrase The Canadian dollar was trading at 1.3320 US dollars, up 0.5% from yesterday’s rate of 1.3304 USD. This follows news that demand for oil is expected to increase due to the reopening of China’s economy and falling crude inventories in the United States.
Central Banks Outlook:
The Federal Reserve, the Bank of England, and the European Central Bank (ECB) will hold their policy meetings next week. Markets anticipate a 50bp rate hike, with some analysts pointing out that a 50bp increase is virtually guaranteed for next week. Rabobank economists note that while 25bps hikes are still possible from March, stronger economic conditions and rising wages could delay this decision and lead to more significant increases down the road.