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Stephen Poloz’s life just got a lot more complicated: The week ahead

The life of Stephen Poloz has only become more complicated.

Not that the governor of the Bank of Canada was going to tinker with interest rates this week – he was not – but an uncertain economic prospect has only become much more uncertain.

Mr. Poloz, senior deputy governor Carolyn Wilkins and their colleagues were already on the way to Wednesday's policy announcement worried about the possible outcome of talks to renegotiate the North American Free Trade Agreement.

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Now they have the increased threat of US tariffs for steel and aluminum tariffs to worry about in the aftermath of President Donald Trump's commitment to hit those products with charges of 25 and 10 percent respectively this week.

They would hit the Canadian economy hard, among other things to force the Bank of Canada to react.

You can also add that the economy has been cut back from the previous wave, with an annual rate of 1.5 and 1.7 percent in the third round and the fourth quarter of 2017, which the central bank is still looking at to see how consumers deal with the latest rate hike, and how the country adjusts to new mortgage qualification rules.

"The more recent trend in Canadian economic growth observed at the end of 2017 and the increasing risk of a trade war are good reasons for the BoC to remain cautious, although the January report [consumer price index] further accelerates consumer inflation showed, "said Laurentian Bank Securities, chief economist Sébastien Lavoie and analyst Hugo Lacasse.

"After the increase in mid-January, we have only expected one policy increase of 25 basis points this year", they added in a preview of Wednesday's decision.

"Given these new disappointing developments for the Canadian outlook, we continue to feel comfortable with our call."

Others expect more than one increase from the Bank of Canada this year, the most important overnight rate being 1.25 percent.

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<img alt=" Bank of Canada Senior deputy governor Carolyn Wilkins and governor of the Canadian Bank, Stephen Poloz listen to a question at a press conference in Ottawa, on We Tuesday, January 17, 2018. [Banking] Senior Deputy Governor Carolyn Wilkins and Bank of Canada Governor Stephen Poloz listen to a question at a press conference in Ottawa, on Wednesday, January 17, 2018.

Regardless, do not expect much tips from Mr. Poloz and Ms. Wilkins on Wednesday.

"An aversion to forward guidance will cause the BoC to give no clear signals about what's ahead," said CIBC World Markets chief economist Avery Shenfeld.

"They will continue to insist that the rates will eventually be higher, but will have enough warning words about the prospects of justifying a stand-to-stand this month." [19659002] It's a busy week, even without the Bank of Canada. The rest of the calendar:

Monday: & # 39; Nerves of steel & # 39;

There is not much in the field of economics or income, but watch how the markets opened up after the unrest of last week.

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"Stock markets slowed [last] week to growing risk of US-led global trade peak," said Bank of Montreal senior economist Robert Kavcic in a report entitled "Nerves of steel," referring to the announcement of Mr. Trump & # 39; s rate and mentioning the loss of 2% of the S & P 500.

"After the warmed up volatility in recent weeks the index remains approximately the same as the year, while most major global indices look at numbers falling, "Mr. Kavcic added.

"The TSX returned 1.6 percent, with tariff concerns overshadowing a solid run of bank profits, including a wave of dividend increases.The banks dipped 1.1 percent of the week, but are the second best performing (or least -smal) sector on the Canadian lan dscape this year, 2.1% less. "

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Tuesday: Watch our mates [19659002] It is always worthwhile to see what happens in Australia, given the similarities in our economies.

The Reserve Bank of Australia is expected to maintain its main interest rate at 1.5 percent today, while Capital Economics projects the Wednesday report on gross domestic product to show growth in the fourth quarter of 0.5 percent.

Also look at South Africa, given the recent political unrest. Capital Economics expects the economic reading to increase the GDP of the fourth quarter with an annual rate of 2.3 percent.

Also the US benchmark for factory orders in January, which is expected to show a decline of 1.2 percent, and a handful of business results, including Aecon Group, Clearwater Seafoods Inc., Great Canadian Gaming Corp., Roots Corp. and Wajax Corp.

Wednesday: Trump & # 39; s tirades

A busy day, starting with Mr. Trump, focuses on trade deficits.

The US trade gap is expected to reach USD 55 billion or more in January, thus more than USD 53.1 billion in December.

"The week with data releases [this] alone is likely to harden Trump's protectionist views, with the trade figures for January (Wednesday) that are expected to show a further increase in the deficit," said Paul Ashworth of Capital Economics.

Statistics Canada publishes its monthly trade report simultaneously, and economists expect a narrower $ 2-billion fro m $ 3.2 billion dollars from December. (Yes, Mr. Trump, the debt to Canada.)

"The current account data showed a smaller deficit on trade goods than the monthly readings for the fourth quarter," said Royce Mendes of CIBC.

"So, despite compensatory movements in crude oil export volumes and prices, and little change in US import demand, the trade deficit could still benefit from that more favorable starting point."

The federal agency also reports the fourth quarter labor productivity, a important, as a boring measure. 19659002] In addition to the 10 am ET decision by the Bank of Canada, there is also the Federal Reserve's Beige Book with regional economic conditions in the afternoon and a handful of operating results, including from Athabasca Oil Corp., Brookfield Real Estate Services Inc. and Linamar Corp.

Thursday: an easy act to follow

Given that Mr. Poloz expected nothing to have done the day before, the European Central Bank has an easy act to follow when decisi [19659103] President Mario Draghi of the European Central Bank (ECB) holds a press conference at the ECB's headquarters in Frankfurt, Germany, December 7, 2017. ” class=”article-media-photo__content__img” data-id=”37323995″ itemprop=”url” src=”” />

President Mario Draghi, President of the European Central Bank, speaks a press conference at the ECB's headquarters in Frankfurt, Germany, 7 December 2017.

"It was just in December that the ECB issued its" substantial upward revisions of GDP growth forecasts " announced, "said BMO senior economist Jennifer Lee.

" Although inflation had not yet shown convincing signs of an upturn (still the case), the board believed that the language related to the different dimensions of the monetary policy stance and forward guidance could be looked at again in the future & # 39; next year, "she added.

" So when is & # 39; asked & # 39; Given the improved prospects, we believe that the meeting of 8 March should be that meeting. An interest rate hike is not even on the radar this year, but the ECB can take a step towards ending its [quantitative easing] program that began in March 2015. "

We'll also be the latest news about the real real estate market as Canada Mortgage and Housing Corp. reports that BMO expects a rising construction to begin at an annual rate of about 218,000 in February.

That will be followed 15 minutes later by a forecast from Statistics Canada to show a 2 fall in building permits in January

Canadian Western Bank, Dorel Industries Inc. and Paramount Resources Ltd. are among companies that publish quarterly results

Friday: throw the dice [19659002] Go ahead, throw the dice on what you expect from Statistics Canada's monthly job report.

It's always a craps shoot, but for the sake of clarity, economists expect the results of February just show work gains between 2,000 and 20,000, and unemployment at 5.9 percent. [19659002] That would follow on what was reportedly a loss of 88,000 jobs in January.

"The full / part-time split will be seen after the January part-time work has dropped by a record of 137,000," RBC economists said in a preview, also noteworthy, the focus on wage increases after the last report showed an annual increase of 3.3 percent of the average hourly wage, the fastest in almost two years.

"Part of that increase was due to a minimum wage increase in Ontario, although there also seemed to be some acceleration in other parts of the country," RBC said.

"Further signs of wage growth above a minimum wage impact would confirm the Bank of Canada that the labor markets operate at least in the neighborhood of, if not more than, long-term capacity limits."

There is more for Mr. Trump, too. Observers expect that the jobs report of the US February will show 200,000 positions created, and possibly much more, with unemployment being only 4 percent.

"The employment effect of February (Friday) can also convince Trump that he knows best, with our econometric model that suggests that non-farm payrolls have increased by a significant 250,000," Ashworth of Capital Economics said.

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