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Big day for Canada trading between data and OPEC speculation

Christmas shopping

Christmas shopping

Stock markets are mixed to finish the week. US index futures are up 0.3% continuing their post Fed rally while European indices have faded into the weekend with the FTSE and Dax down marginally. Overnight economic news was generally positive with flash manufacturing PMI reports for Japan, Germany and France all improving with the US report due later this morning. 

CAD and Canadian stocks have the potential to be particularly active today with market moving news and speculation coming from two directions. 

First, the state of the Canadian economy could influence trading early. Unlike most other resource country central banks, the Bank of Canada has not cut interest rates this year in response to lower commodity prices, its last cut having come in July 2015. Governor Poloz prefers to let CAD to the heavy lifting instead. The Bank of Canada has been hoping the economy would bounce back from the spring forest fire disruptions in the summer but indicated at its last meeting that July was not as strong as hoped.  Friday’s Canadian retail sales and inflation figures may give a better idea of how the Canadian economy is doing and whether the Bank of Canada may come under pressure to cut rates later this year or not.

We also could see action in oil prices impact trading in CAD and energy stocks well into next week. Speculation continues to swirl around side discussions between OPEC and Russia at a big energy conference in Algeria this weekend. 

Iran and Saudi Arabia have been working to iron over their differences which sunk the Qatar meeting in April. Apparently the Saudis have agreed to cut production in exchange for Iran freezing production. What to do about Libya and Nigeria restoring depressed production may also be an issue. Apparently OPEC is ready to call a special meeting to ratify any agreement that may come out of these informal talks.

Today, WTI is up 0.1% while Brent is up 0.8% as traders position ahead of the meeting. Expectations of success have grown in recent days even though the last attempt at a deal to end the market share price war ended in failure. Results of the meeting could spark significant action in oil to start next week. For today the main oil related news is US drill activity this afternoon.

Corporate News

There have been no major corporate announcements this morning. 

Economic News

Japan flash manufacturing PMI        50.3 vs previous 49.5

France flash manufacturing PMI        49.5 vs street 48.5
France flash service PMI        54.1 vs street 52.0

Germany flash manufacturing PMI    54.3 vs street 53.1
Germany flash service PMI        50.6 vs street 52.1

France GDP                1.3% vs street 1.4%

Singapore consumer prices        (0.3%) vs street (0.4%)
Singapore core CPI            1.0% vs street 1.1%

Upcoming significant economic announcements include:

8:30 am EDT        Canada retail sales            street 0.1% vs previous (0.1%)
8:30 am EDT        Canada retail ex auto            street 0.5% vs previous (0.8%) 
8:30 am EDT        Canada consumer prices        street 0.1%
8:30 am EDT        Canada core CPI            street 1.4%

9:45 am EDT        US Markit flash manufacturing PMI    street 52.0

12:30 pm EDT        FOMC Kaplan speaking

1:00 pm EDT        US Baker Hughes drill rig count        previous 506

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