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No Clear Winner in Italian Election | Latest Round of NAFTA Talks Conclude Today
Published March 5, 2018
In Canada, economic growth for the final quarter of 2017, posted last Friday, was slightly disappointing (+1.7%), bringing annual growth to 3.0%. The loonie has started 2018 as the worst performing major against the greenback while all other majors have gained against the US dollar. USD/CAD is up nearly 1% on the day approaching 1.30.
Italy faces a prolonged period of political instability after voters delivered a hung parliament yesterday, spurning traditional parties and flocking to anti-establishment and far-right groups in record numbers. With votes counted from more than 75% of polling stations, it looked almost certain that none of the three main factions would be able to govern alone and there was little prospect of a return to mainstream government, creating a dilemma for the EU. A prolonged political stalemate could make heavily indebted Italy the focus of market concern in Europe, now that the threat of German instability has receded after the revival yesterday of a grand coalition under Chancellor Angela Merkel.
Ministers from the US, Canada and Mexico meet again today to wrap up the latest round of NAFTA negotiations under the shadow of Trump’s steep proposed tariffs on steel and aluminum imports. Trump is expected to finalize the tariffs – 25% on steel and 10% on aluminum – later this week, posing a tough challenge for US trade representative, Tobert Lighthizer, Canada’s foreign minister, Chrystia Freeland, and Mexican economy minister, Ildefonso Guajardo. The Mexican and Canadian ministers are likely to press Trump’s trade envoy on whether their countries will be excluded from the blanket tariffs.
Oil prices are mixed today ahead of a meeting between OPEC and US shale firms in Houston, raising expectations that oil producers will discuss how to clear a global oil glut. Brent crude is down ~0.20% and WTI crude is up ~0.13% at time of writing, trading at $64.25 and $61.34/barrel respectively. Oil ministers from OPEC and other global oil players are set to gather in Houston as CERAWeek, the largest energy industry conference, begins today.
The key economic data for Canada this week includes the Bank of Canada policy announcement on Wednesday along with trade deficit, housing starts, and building permits on Thursday and the employment report on Friday. No change is expected during the BoC policy announcement on Wednesday. Deputy Governor Lane speaks on Thursday.