Briefing highlights
- Gas prices expected to remain high
- Global markets mixed so far
- New York poised for weaker open
- Loonie heads toward 81 cents
- Canadian Natural buys Cenovus assets
- Bank of Canada in spotlight this week
- What to expect in trade, jobs reports
Ouch
If you're just back today from a summer vacation road trip, a long weekend scenic drive, or taking your kid to university out of town, you know what I'm talking about.
Here's the math: I pumped $23.13 in regular unleaded Saturday – 17.4 litres at 132.9 – in the time it took me to count to just 24.
That's the toll attributed to Harvey, the wicked storm that tore through Texas and crippled refining.
The last time I did this exercise – mid-April, 2014, when I paid 137.9 in Toronto – it took me to the count of 18 to pump $20.60.
And don't expect a break for some time yet.
"Canada imports some refined products from the U.S., and the market is tightly integrated, suggesting no relief for drivers over the near-term," said Toronto-Dominion Bank economist Dina Ignjatovic.
"It is too early to tell how long the flooding in Texas will persist, or how long refineries will be shut down," she added in a report.
"But, it is safe to believe that drivers will be facing elevated pump prices for several weeks."
Pump prices surged last week by more than 10 cents a litre by midday Friday, and even more in some areas. Then came further gas pains and then a dip, leaving costs today at an elevated 130.9 near my home in Toronto, cheaper in some cities and more expensive in others, notably Vancouver.
Refineries and affected pipelines are beginning gradual restarts.
Obviously, they've got it worse in Texas as they try to rebuild from the storm's devastation.
But the pump prices we're seeing still hurt, and will pinch family budgets if they persist.
Outrageous, right?
Certainly, many Globe and Mail readers think so. Some stayed home on the long weekend, while others said they can swallow the increase.
"Didn't have plans to drive far, anyway, and I just keep topping up so I don't have a heart attack," one woman said.
We asked readers for their views late last week as gas prices were spiking. Here's a sampling.
"Yes, staying close to home with a little driving as possible."
"All I can say is, boy, am I glad one of my cars is a diesel Smart car, even with the increase I'm only spending 25 a month on fuel."
"To the people whining about gas prices - try looking at commodities markets right now. Gasoline shot thru the roof [Thursday] due to supply concerns."
"I live in the lower mainland, where we pay the highest gas prices on the continent. Welcome to our world."
"Seriously, if you're changing your weekend plans because gas went up 17 cents, you're in big trouble financially and probably shouldn't be going anywhere."
"Will stay home. This is unacceptable."
"Our fill-up cost $3 more than last week. We can live with it."
"Staying put in Victoria - no better place to go."
Read more
- U.S. gas prices still rising as energy industry starts to recover from Harvey
- Mark Rendell: Ontario gas prices headed for major spike in wake of Harvey
- Josh O’Kane: Weeks of pain ahead for motorists as gas prices jump
Investors nervous
Global markets are mixed so far amid the escalating tensions on the Korean peninsula, with European stocks mixed and New York poised to open lower after the three-day weekend.
Tokyo's Nikkei lost 0.6 per cent, Hong Kong's Hang Seng was little changed, and the Shanghai composite gained 0.1 per cent.
In Europe, Germany's DAX was up 0.6 per cent by about 7:45 am ET, the Paris CAC 40 was little changed, and London's FTSE 100 was down by less than 0.1 per cent.
New York futures were down, and the Canadian dollar was at 80.7 cents (U.S.).
"Flare-ups on the Korean peninsula are fast becoming a weekly occurrence, and while financial markets remain nervous about the potential for the next dangerous conflagration, each escalation on the part of North Korea seems to elicit a milder market reaction than the previous one," said CMC Markets chief analyst Michael Hewson.
"It's almost as if what has been unfolding on the Korean peninsula in recent weeks is desensitizing markets and becoming more like background music for investors, with an occasional ramping up of the bass, the only reminder that a wider crisis or conflict could take hold quite quickly," he added.
Read more
What to watch for this week
The big event, and the big question, is whether the Bank of Canada raises its benchmark interest rate Wednesday.
Analysts are divided, but the odds are certainly higher after a reading last week that showed Canada's economy expanding at a rapid annual pace of 4.5 per cent in the second quarter.
Some expect Governor Stephen Poloz and his central bank colleagues to raise their overnight rate by one-quarter of a percentage point, to 1 per cent, while others expect them to wait until October.
Derek Holt, for one, believes they'll do it Wednesday.
"There are enough areas of strength in the Canadian economy to offset the effect of rate hikes on the interest sensitives and still result in moderated growth," said Mr. Holt, Bank of Nova Scotia's head of capital markets economics.
"Indeed, the whole point is that Canada needs the slower growth that would arise from tightening policy levers," he said in a lookahead to the decision.
"If the almost emerging-markets style of growth that has been unfolding over the past four quarters were to continue unabated then imbalances and inflationary consequences would put Canada at the outer edge of the global experiment over how fast an economy can grow and for how long without stoking pressure points that would be difficult to reverse."
Benjamin Reitzes, however, doesn't see the hike coming until next month.
"Mr. Poloz's words that he'll be evaluating the economic backdrop quarter by quarter are a strong suggestion that October is the next date for a potential hike," said Mr. Reitzes, Bank of Montreal's Canadian rates and macro strategist.
"And, the BoC has been in radio silence since July, providing absolutely no messaging at all," he added, noting how the central bank had widely broadcast its intentions before its mid-July increase of a quarter-point.
"We continue to anticipate a follow-up hike will come at the October meeting and are concerned that a September hike could sharply strengthen the Canadian dollar and tighten financial conditions more than the bank would like," Mr. Reitzes added.
The rest of the calendar:
Today
There's not much on tap, though Hudson's Bay Co. reports its quarterly results.
Wednesday
Besides the central bank decision, Statistics Canada is expected to report another trade deficit for July.
Estimates among economists range from between about $2.5-billion to as high as almost $4-billion, compared to June's $3.6-billion.
"Canada's trade deficit is expected to narrow meaningfully in July, but remain substantial at $2.5-billion," said BMO's Mr. Reitzes.
"The Canadian dollar firmed on average in the month, which should trim the import bill somewhat. However, oil prices fell to their lowest level of 2017, which kept energy exports restrained."
The U.S. also reports its trade balance, which seems to be President Donald Trump's favourite statistic. Economists expect a higher deficit of up to almost $45-billion (U.S.).
Thursday
Mario Draghi and his European Central Bank colleagues have a rate decision, too, and no change is expected.
They may, though, shift their quantitative easing initiative.
"While an ECB rate hike this year is unlikely, we look for President Draghi to announce some changes to the central bank's QE program after the Sept. 7 monetary policy meeting concludes," said BMO senior economist Jennifer Lee.
"Although policy makers are probably apprehensive about making tweaks, particularly with the euro briefly breaking through a 21⁄2-year high of $1.20 in recent days, the data over the past week continue to point to stronger domestic growth (such as a pick-up in headline euro area inflation and decade-high economic confidence), which is becoming more difficult to ignore."
On the corporate front, Transcontinental Inc., Dollarama Inc., Dell Technologies Inc. and Brick Brewing Co. report quarterly results.
Friday
Today came quickly, right? Short week. Enjoy it.
But not so fast. First, we get to see Statistics Canada's monthly jobs report.
As always, jobs numbers are difficult to forecast. But economists expect the report to show job creation of between 5,000 and 24,000 in August, with unemployment possibly ticking up to 6.4 per cent. Or, if we're lucky, holding at 6.3 per cent.
"A hot job market has helped power consumer spending, which in turn has been the big surprise in GDP growth this year," said Andrew Grantham of CIBC World Markets.
"Some slowing in employment is to be expected, particularly as provinces such as B.C. and Quebec are close to record high employment rates already, suggesting labour will be harder to come by," he added.
"However, even a slower 1-per-cent growth rate in employment, with some upward pressure on wages, would see household incomes continue to rise at a solid clip."
Read more
- John Heinzl: Loonie’s strength complicates Bank of Canada decision
- Barrie McKenna and Mark Rendell: Canada’s fast GDP growth raises spectre of more rate hikes