TD/ Canada Trust Economic Highlights – Jan 27


United States

  • With little in the way of U.S. data out this week, investors turned their attention to the global economy where softer economic data out of China and rising political risks have given pause to investor optimism about the economic recovery.
  • Data out of China showed a dip in manufacturing activity in January, while rising political tensions in the Ukraine and Turkey and economic turmoil in Argentina also contributed to the selloff in global stock mar­kets. The risk off behaviour benefited U.S. bonds.
  • Investor attention will return to America next week. Financial markets are looking for guidance on whether the Fed will again reduce the pace of asset purchases as they did in December. We expect another $10 billion reduction in asset purchases, bringing the monthly total to $65 billion.


  • The Canadian dollar briefly dipped below US$0.90 for the first time in four years, losing a cent this week.
  • The Bank of Canada presented a more dovish tone in its interest rate announcement, tying the future movement in interest rates to the evolution of economic data.
  • This week’s inflation report underpinned the Bank’s more dovish tone with core inflation running at 1.3% year-over-year in December – well below the Bank of Canada’s 2% target.
  • Black Friday deals helped entice households to go to the mall in November, with real retail sales rising by a stunning 0.8%. However, retail spending was soft for 2013 as a whole.
  • Modest economic growth, a slow and gradual trek back to 2% inflation and a Bank of Canada sitting on the sidelines until the second half of 2015 will continue to clip the loonie’s wings over the next two years.

For further information, please contact:

John Maveety Manager, Residential Mortgages – Greater Ottawa Area
TD Canada Trust T: (613) 371-1984 F: (888) 899-1984 P: (866) 767-5446