Economic calendar: Quite day ahead of intense Thursday

Summary:

• Canadian retail sales reading expected to show deterioration

• Market consensus expects API data to show minor drop in inventories

• Ford, P&G and United Technologies among companies reporting earnings today

Wednesday can be seen as a day to rest before intense Thursday. Nevertheless, some semi-important data will be released today as well. Canadian retail sales reading will take the spotlight in the early afternoon followed by the Richmond Fed index release. API will publish its weekly oil inventories estimate in the evening. Apart from that, some of the US blue chips will submit their earnings reports today.

1:30 pm GMT - Retail sales report for November from Canada. Expectations of future BoC decisions changed greatly once the Federal Reserve signalled it is likely to slow or even pause the rate hike cycle. Nevertheless, a longer streak of favourable data could encourage Canadian central bankers to diverge its policy from the US counterpart. Retail sales data should be watched closely as it shows the strength of the demand side at retail level and therefore helps gauge the level of overall consumption. Canadian retail sales are said to have contracted 0.6% MoM when it comes to headline reading.

3:00 pm GMT - Richmond Fed manufacturing index for January. While manufacturing indices from regional Fed banks seldom result in any bigger prices swings, the situation may be different this time. Index published by the New York Fed slumped severely while the gauge released by the Philadelphia Fed ticked higher. As the US government shutdown causes hard data releases to be postponed, investors turn to “soft” data in order to assess condition of the US economy. Richmond Fed index is expected to come in at -6 pts against previous -8 pts.

9:40 pm GMT - API report on oil inventories. The US oil production keeps expanding although the pace is likely to slow. The latest estimates provided by the Energy Information Administration suggest that the US crude output will increase at the smallest pace in February since May 2018. In case demand remains robust and output growth continues to slow we may experience a period of inventory draws. Today’s API reading is expected to show 0.4 mb drop.

Central bank speakers scheduled for today:

• 9:30 am GMT - BoE’s Broadbent

Major US companies reporting earnings today:

• United Technologies (UTX.US)

• Procter & Gamble (PG.US)

• Ford Motor (F.US)

• Comcast (CMCSA.US)

Brent (OIL) managed to break above the price zone ranging around $61.50 handle. News of slowing US production are definitely positive for oil, prices although its impact may be insignificant in case demand weakens. Source: xStation5