GDP and other data to look for this week

Upcoming data from the U.S. and Canada are expected to back up the forecasts and recent interest rate decisions of North America’s central banks.

In the U.S. on Tuesday, consumer confidence data is expected to show that the core PCE price index is “bang on the Fed’s 2% inflation target,” CIBC’s Avery Shenfeld said in a Friday report.

While headline inflation may be higher this time around, “that gap won’t persist into 2019,” he said, given oil prices seem to be levelling off. On Friday afternoon, WTI crude was trading between US$68 and US$69 while Brent crude was trading around US$76.

Inflation sticking around 2% matches statements made by Fed Chair Jerome Powell on Friday, during a headline speech at a central banker symposium. He said he doesn’t expect inflation to accelerate—a reason not to step up the pace of rate hikes.

Read: Fed’s Powell hints at road ahead for rate hikes

In Canada, CIBC expects Thursday’s GDP data will be “solid.” The data may exceed its 3% call for the quarter but that would be due to “a positive gap between the quarterly and monthly series,” Shenfeld wrote.

Based on Canada’s domestic current account balance, “sustained [Canadian dollar] strength is not yet in the offing,” he said.

Strong economic growth for Q2 would support the Bank of Canada’s latest rate hike, in July, to 1.5%. At that time, the central bank decided to raise rates because it forecast the economy would remain resilient despite deepening trade tensions.

Read: BoC raises key rate, says existing tariffs to have modest impact

European data

The week will be busy for Europe, Moody’s said in a week ahead report from Aug. 23. Preliminary eurozone CPI figures for August “will show that inflation in the currency area eased slightly to 2%, after it peaked at 2.1% in July,” the agency said.

Moody’s doesn’t expect to change its view on the European Central Bank. “We think the ECB will proceed with its announced plan to end its asset purchases in December, but it won’t be pressured to start lifting the deposit rate until the fourth quarter of next year,” the agency said, noting the central bank’s inflation target of 2%.

In July, the ECB left its key rates and monetary stimulus settings unchanged, despite growth in the region.

Read: ECB will keep interest rates low into next year

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.