Weekly Economic Update

For the week of November 3 to 7

The Bloomberg Nanos Confidence Index has fallen in four straight weekly releases coming into today’s update and currently sits at 57.9. A value above 50 on the index suggests net positive views on the Canadian economy. We may see the index continue to struggle in today’s release as the price of oil remains low. In the United States, ISM Manufacturing is forecast to fall slightly from 56.6 to 56.1 for October while ISM Prices Paid is expected to decrease to 58.0 from 59.5. Later today, Construction Spending is expected to show a gain of 0.7% throughout September, following a drop of 0.8% in the previous month.

The highlight of the week throughout the Canadian economy comes on Friday with an update to employment figures for October with expectations to see a net decrease of 7.5K jobs and the Unemployment Rate ticking up to 6.9%. Governor Poloz will maintain the Bank of Canada’s neutral stance until there is more consistency out of domestic growth and employment numbers. Building Permits throughout Canada will update on Thursday and are expected to show an increase of 5.0% for September after the fall of 27.3% in the previous month.

All eyes will be on the Employment Data scheduled to release on Friday out of the United States as well. Many investors expect the Federal Reserve to adjust interest rates relatively soon. Nonfarm Payrolls are expected to increase by 234K for October while the Unemployment Rate remains at 5.9%. With economic tapering now complete, sustained economic growth could lead to interest rate increases in the near future.

In the currency markets, the Canadian dollar has fallen in early trading against its U.S. counterpart as the price of oil continues to struggle, trading close to $81 per barrel. As Canada’s largest export, oil prices have a significant impact to growth in the Canadian economy and the strength of the CAD. The major risk to the CAD this week comes on Friday with the dual employment release out of Canada and the United States. The CAD could fall further against the USD if the U.S. employment data continues to hit expected levels while the Canadian data remains stagnant.

Todays expected range: 1.1250 – 1.1350

Source: Bloomberg

Posted by Concentra Financial Markets

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