Weekly Economic Update

For the week of September 2 – 5, 2014

In Canada this morning, the RBC Canadian Manufacturing PMI will update for August after releasing at 54.3 in the previous announcement. The Index is currently sitting at the highest level since hitting 55.6 back in October of 2013. South of the border, Markit US Manufacturing PMI is forecast to remain at 58.0 throughout August. ISM Manufacturing is expected to decrease slightly from 57.1 to 57.0 for August while ISM Prices Paid is forecast to drop from 59.5 to 58.5. Later this morning, Construction Spending is expected to show an increase of 1.0% throughout July after falling by 1.8% in the previous month.

It is a busy week throughout Canada, headlined by the Bank of Canada Rate Decision tomorrow followed by August employment data scheduled to release on Friday. The Bank of Canada may hint at a more hawkish tone after the strong revision to the previous employment data. The Unemployment Rate is forecast to remain at 7.0% while the Net Change in Employment is only expected to increase by 9.5K after gaining by 41.7K in the latest release.

Throughout the United States this week, focus falls on the Employment data scheduled for Friday. The Change in Nonfarm Payrolls is expected to increase by 225K following the gain of 209K in the previous release. The Unemployment rate is expected to fall slightly from 6.2% to 6.1%. Also on the schedule for this week, Factory Orders are forecast to rise by 11.0% for July after gaining by 1.1% in the previous release.

In the currency markets, the Canadian dollar has struggled against its U.S. counterpart in early trading this morning, losing most of the gains made back on August 27. The next risk to the CAD comes with tomorrow’s rate announcement, where it is expected to see the Bank of Canada hold their neutral tone as they continue to be very cautious about sounding too aggressive on the Canadian economy. Focus will quickly shift to the employment data scheduled for Friday as it remains a strong indicator of economic performance out of both Canada and the United States.

Todays expected range: 1.0870 – 1.0970

Source: Bloomberg

Posted by Concentra Financial Markets

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