CANADA: Retail Sales and Macklem Ahead With BoC Seen On Track To Pause
Feb-21 13:12
- Canada retail sales for Dec/Jan advance are released today at 0830ET, expected to confirm the 1.6% M/M in Dec per last month’s advance with the two-month GST/HST holiday starting mid-Dec.
- The January advance will also be important. It in theory should be further boosted considering it had a full- rather than half-month of the tax holiday, but it follows December’s front-loading. Analysts on this point:
- CIBC: “For January, we expect only a modest advance, with consumers keeping up an elevated level of spending during the tax holiday without stretching much further than in December.”
- RBC: “In January, there were signs that spending was pared back. Unit auto sales were also weaker in the same month – we expect the advance estimate will show slower spending at the start of 2025.”
- Later on, BoC Gov. Macklem speaks on “Trade friction, structural change and monetary policy”, with text due 1230ET. The speech itself will start at 1245ET and will be followed by audience Q&A before a press conference at ~1410ET.
- BoC-dated OIS has priced between 6-8bp of cuts for the Mar 12 decision since Tuesday’s stronger than expected CPI report although we’re still to see Q4/Jan GDP (Feb 28) and Feb jobs data (Mar 7) along with further tariff deliberations.
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EQUITIES: EU Bank put spread
Jan-22 13:10
SX5E (21st Feb) 155/145ps, bought for 1.65 in 10k.
STIR: Repo Reference Rates
Jan-22 13:05
- Secured Overnight Financing Rate (SOFR): 4.29% (+0.00), volume: $2.361T
- Broad General Collateral Rate (BGCR): 4.27% (+0.00), volume: $894B
- Tri-Party General Collateral Rate (TGCR): 4.27% (+0.00), volume: $875B
- (rate, volume levels reflect prior session)
JPY: Rabobank Still Believe USDJPY Can Move Back to 145.00 This Year
Jan-22 12:58
- Rabobank believe there are two key factors for USDJPY making a convincing break below 155.00. Firstly, the signals provided about the pace of tariffs announced by Trump will remain a key influence on the USD, and the Fed’s scope to continue easing.
- A second key factor for the USDJPY outlook according to Rabo will be the relative hawkishness of BoJ Governor Ueda on Friday. They believe his tone will impact expectations regarding the timing of the next policy move. Rabo reiterate their view that USDJPY can move back to 145 on a 12-month view, though this assumes a cautious, but progressive trajectory for BoJ interest rate hikes.
- The bank also notes that while Trump has not singled out Japan with respect to his tariffs threats this week, it is assumed that they are coming. It is commonly considered likely that Japan’s auto sector will be in Trump’s line of fire. Vehicles (including parts and accessories) comprise almost 30% of Japan’s exports to the US, which is bigger than any other sector.
- Rabo caveat this by noting that during Trump’s first presidency a trade deal that gave US farmers more access to the Japanese market allowed the auto sector to avoid extra tariffs.
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Jan-30 21:43
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