For the week of August 13 – 17.
According to Statistics Canada, employment rose 54.1K in July from 31.8K in prior month, beating economists’ estimated gain of 17K in employment. The majority of the gain came from part-time employment (+82K), followed public employment (+50k). Full-time employment fell 28K, vs. last month’s gain of 9K, while private employment rose 5.2K in July. Average hourly wages came in lower at 3 percent, from 3.5 percent in June. Canada’s unemployment rate came in a smidge lower than estimate, at 5.8 percent vs. 5.9 percent in June, which is now tied for its lowest level since the 1970s. The unemployment rate in Ontario hit 5.4 percent, matching the lowest rate on record since 2000.
Consumer prices in the United States came in line with expectations on a month-over-month basis and year-over-year basis in July, at 0.2 percent and 2.9 percent, respectively. Weakness in energy was a drag to the headline CPI increase relative to the core CPI. The decline in electricity (-1.4%) and utility gas service (-1.7%) more than offset rising gasoline inflation (0.5%).
Contagion spreading to euro area lenders were a concern last week, after the Financial Times reported that the European Central Bank is becoming concerned about the exposure of some of the region’s banks to Turkey. Turkey’s currency, the Lira, plunged as much as 13.5 percent last Friday. Subsequently, the US plans to double tariffs on Turkish steel to 50 percent, and raise the rate on aluminum to 20 percent. President Erdogan said Turkey was in an ‘economic war’ while ruling out higher interest rates to stem the Lira’s losses or seeking an international bailout.
Scheduled releases in Canada this week include existing home sales, manufacturing sales and consumer price index data. Schedule releases in the US this week include import and export price index, retail sales, various manufacturing figures, and readings for the University of Michigan’s Sentiment.
Both US and Canada government yields are trading flat to 1bp lower with S&P futures lower (-3.5). The Canadian dollar slid to its weakest level against the dollar since July 24, as haven currencies outperform on fears of Turkey crisis. Today’s expected range of Canadian dollar is 1.3105 – 1.3205.