Weekly Economic Update

For the week of September 29 to October 3

It is a quiet start to the week throughout Canada with only one release on the schedule. The Bloomberg Nanos Confidence Index will update for the period ending September 26, 2014, after releasing at 59.3 in the previous release. The index has been fluctuating between 58.0 and 60.0 since July 25, 2014. South of the border, Personal Income has increased by 0.3% on a month over month basis for August, matching the expected gain while Personal Spending has exceeded expectations with a gain of 0.5%. Later today, Pending Home Sales are expected to show a drop of 0.5% for August after increasing by 3.3% in the previous month. The Dallas Fed Manufacturing Activity Index is expected to increase to 10.5 in September from 7.1 in the previous release.

Focus this week in Canada falls on the GDP data for July, set to release tomorrow, September 30, 2014. On a month over month basis, GDP is forecast to show a gain of 0.3%, matching the increase from the previous month. Later in the week, the RBC Canadian Manufacturing PMI will update for the month of September after hitting 54.8 in the most recent update. The PMI has increased in four straight monthly releases leading in to Tuesday’s update for September.

Headlines throughout the United States this week include updates to Mortgage Applications, Factory Orders, the Trade Balance, and Employment data. Factory Orders are expected to show a drop of 9.5% for August after an increase of 10.5% in the previous month. The Trade Balance is forecast to release at -$40.8B for August, close to the release from the previous period of -$40.5B. The week will close with the most important data on Friday, with an update to Employment. Nonfarm Payrolls are expected to increase by 215K for September, following a jump of 142K in the previous release while the Unemployment Rate is expected to remain at 6.1% throughout September.

In the currency markets, the Canadian dollar is relatively unchanged in early trading this morning after losing ground against the USD throughout Friday. The CAD is now at a six month low against its U.S. counterpart as speculation builds that the Federal Reserve may begin to raise interest rates as early as mid-2015. Focus for CAD trading this week falls on the GDP scheduled to release on Tuesday in an otherwise quiet week. Moving forward, the CAD will be vulnerable to the multiple releases out of the United States scheduled for late in the week, with a focus on the updated employment figures. The CAD continues to be driven by central bank policy with the expectations of the Federal Reserve becoming more aggressive before the Bank of Canada.

Todays expected range: 1.1097 – 1.1197

Source: Bloomberg

Posted by Concentra Financial Markets

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