Canada: National Balance Sheet Accounts data will be watched closely – RBC CM

Wednesday’s Q1 National Balance Sheet Accounts data of Canada will be watched closely for the evolution of the credit market debt-to-PDI ratio after it hit a record high of 167.3% in Q4 explains the research team at RBC Capital Markets.

Key Quotes

“We expect a slight decrease in the ratio to 167.0% based on a below-seasonal 0.7%q/q increase in debt. With growth in total assets and net worth expected to exceed growth in credit market debt, the debt-to-asset and debt-to-net worth ratios should also fall. Regardless of the expected declines, the BoC will likely retain its focus on the vulnerability from elevated household debt, in line with the June Financial System Review.’

“Thursday’s April manufacturing sales report is forecast to register a decline of 0.8%m/m largely on the back of indications that auto production dropped around 7% in the month. The volume of manufacturing sales is also expected to fall 0.8% in April. Key uptrend support at 1.3446 is in play in USD/CAD as the week gets under way, with resistance at 1.3547.”