Weekly Economic Update

For the week of August 25 – 29, 2014

It’s a quiet day in Canada this morning, with only the Bloomberg Nanos Confidence Index set to be released for the week of August 22. This is a weekly survey indicating consumer’s thoughts on the strength of the economy, job security and real estate. Last week’s index landed at 58.8, indicating there is a more positive than negative outlook. South of the border, there are a number of releases scheduled for the day. The Chicago Fed National Activity Index released this morning at 0.39, significantly beating expectations of 0.20 for the month of July and much higher than last month’s 0.12. This positive value indicates above-average growth in the economy. The Dallas Fed Manufacturing Outlook level of General Business Activity is expected to decline down to 12.5 in August from 12.7 in July indicating sentiment of manufacturers in the Texas area has slightly declined. Also on the agenda is New Home Sales with surveyed results expecting a 430K increase in sales or 5.9% over the month of July. Economists hope the housing market has turned around from last month when new home sales declined 8.1%, lagging behind the increased factory activity in the U.S. economy.

The Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming has wrapped up with a few statements from Fed Chairwoman Janet Yellen gaining some grounds. Yellen noted the job market has improved faster than expected over the year and that the significant slack found earlier in the year (which goes hand-in hand with low interest rates) may not be the case anymore. Quantitative Easing is expected to end in October and with the jobs outlook improving and inflation higher we may see indication of rising rates earlier than mid-2015.

Headlines throughout Canada this week include updates to the Current Account Balances for the second quarter of 2014, released on Thursday. Economists expect -$11.6B, minimally changed from Q1’s -$12.4B. Friday’s releases include GDP, Industrial Product Prices and the Raw Material Price Index. Canada’s economic growth for Q2 is expected to advance 2.7%, up from first quarter’s sluggish growth of just 1.2% blamed on the harsh North American winter. Over June, the economists expect the economy to have advanced 0.2% and 3.0% on a year-over-year basis.

There are many releases throughout the United States this week, with focus falling mainly on Durable Goods Orders, Housing Prices, and Consumer Confidence on Tuesday and Jobless Claims and GDP on Thursday. GDP is expected to advance 3.9% on a quarter-over-quarter basis, down from 4.0% from April through June. So far the U.S. economy is expected to expand 3% in Q3 according to estimates of 76 economists.

In the currency markets, the Canadian dollar has gained 0.1% against its U.S. counterpart in early trading this morning. Governor Poloz speaks today at the Canadian Association of Business Economists titled on “Integrating Uncertainty and Monetary Policymaking: A Practitioner’s Perspective” however there will be no sharing of the presentation. Investors will be looking towards the GDP this week out of both Canada as the next piece of major economic data.

Todays expected range: 1.0940 – 1.1040

 Source: Bloomberg

Posted by Concentra Financial Markets

Can We Take Your Order?

471920189Order, hedge, aggregate …sounds like a bunch of jargon, right? Maybe. But, a little jargon is necessary and getting to know these terms can help you talk to your members about foreign exchange trading.

An Order allows your member to take advantage of short-term market fluctuations by buying or selling funds at a specific target exchange rate. When an Order is placed, the member outlines the amount of funds to buy or sell and the specific exchange rate at which to buy or sell. Once the market hits the target exchange rate, the order is ‘filled’ and settled as a Spot transaction.

Generally, Orders are placed with one of two instructions:

  1. Good until filled or cancelled
  • the Order remains outstanding for as long as it takes for the market to hit the targeted exchange rate with the added flexibility to cancel the Order at any time
  1. Good until a specific date and time
  • the Order will fill if the market hits the target exchange rate or automatically expires on the date and time specified

Business owners who are buying and selling products in the U.S. require foreign exchange services. Orders are a great tool that allow business owners to source specific exchange rates without spending valuable time watching the market.

Would your credit union like to add foreign exchange services to your menu of offerings? With our industry-leading foreign exchange services and experts, we can make that easy and profitable for your credit union. Find out how by contacting the Concentra FX team or 1-306-566-1747.

Weekly Economic Update

For the week August 18 – 22, 2014

In Canada this morning, International Securities Transactions have released at -1.07B for June, below expectations of 5.00B. Global Investors cut their holdings of Canadian government bonds by a record in June as they dropped a total of $9.42 billion from sales and maturities. Later today, the Bloomberg Nanos Confidence Index will update for the period ending August 15, 2014 after releasing at 58.6 in the most recent update. The Confidence Index has fallen in the last three weekly updates. It is quiet south of the border with only one release on the schedule this morning. The NAHB Housing Market Index is forecast to remain at 53 for June. A reading above 50 on the Index suggests that more builders view conditions as good than poor.

Headlines throughout Canada this week include updates to the Consumer Price Index and Retail Sales data, both scheduled to release Friday, August 22. The CPI is forecast to remain unchanged on a month over month basis and Retail Sales are expected to show a gain of 0.3%. Following last week’s upward employment revision, strong CPI data this week could provide optimism going into the next Bank of Canada meeting scheduled for early September.

Throughout the United States this week, focus falls on the CPI and Housing Starts updates scheduled to release tomorrow followed by Existing Home Sales on Thursday. The CPI is forecast to show a gain of 0.1% on a month over month basis while Housing Starts are expected to show a gain of 8.1%. The next Federal Reserve Announcement is schedule for September 17, 2014, but this week’s CPI data will play a key role in the decision. Employment data and CPI data are often regarded as the two most important pieces of economic data that factor into the rate decisions.

In the currency markets, the Canadian dollar has continued to gain against its U.S. counterpart in early trading this morning following the revised employment data on Friday. Investors will be looking towards the CPI data out of the United States as the next piece of major economic data. It could be a volatile week in CAD trading with multiple pieces of economic data on the schedule with potential to impact the CAD/USD trading range.

Todays expected range: 1.0836 – 1.0936

Source: Bloomberg

Posted by Concentra Financial Markets

Moving Forward On Foreign Exchange

Forward, outright, hedge…sounds like a bunch of jargon, right? Maybe. But, a little jargon is necessary and getting to know these industry terms can help you talk to your members about foreign exchange trading.

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A Forward contract, also known as an Outright contract, is an agreement to exchange one currency for another at a future date.

To demonstrate how this process works, here is an example scenario:

On August 1, 2014 a member books a forward contract to sell USD $250,000 on value date December 31, 2014 at a locked in forward rate of 1.0945. Regardless of the spot rate on December 31, 2014 the member will sell the USD funds and consequently buy the CAD funds at the rate of 1.0945 valued at $273,625.00. If on December 31, 2014 CAD appreciated/strengthened against USD to 1.0850 and the forward contract hadn’t been utilized, the member would have only received CAD funds of $271,250.00.

Business owners who are buying and selling products in the U.S. require foreign exchange services such as Forward contracts. These are great tools to mitigate foreign exchange risk by locking in a competitive rate today for a future transaction.

Would your credit union like to add foreign exchange services to your menu of offerings? With our industry-leading foreign exchange services and experts, we can make that easy and profitable for your credit union. Find out how by contacting the Concentra FX team or 1-306-566-1747.

Tax Perils of Joint Accounts

Special thanks to Murray Paszko, CFP, FCSI, TEP, Manager, Trust & Estate Services at Servus Credit Union in Edmonton for contributing this article, originally published in a Concentra Trust bulletin on April 11, 2014.

Many people have concerns regarding their estate having to go through probate. As a result, they reregister their assets in joint names, usually with their children as an estate planning strategy. In solving one issue, they may have unintentionally created other consequences, such as tax issues. In some cases, the tax liability on both the original owner and intended joint owner may be more costly than probate itself.

In certain circumstances, CRA views the transferring or re-registering of capital assets, e.g. real estate, securities, etc., from sole ownership to joint ownership, as a deemed disposition by the original owner at the asset’s fair market value at the time of transfer. This is considered to be a sale even though no cash or consideration was exchanged. This could result in an immediate and unexpected taxable event back to the original owner on any accrued gains on the asset. Another concern is not having the cash available to pay the tax.

The person to whom you transfer capital property will also be liable for capital gains tax upon the future disposition of the capital property based on the value of the asset on the date of transfer.   Continue reading “Tax Perils of Joint Accounts”

Weekly Economic Update

In Canada this morning, Housing Starts have increased by 200.1K throughout July, beating economic expectations of 193.0K. Urban Housing Starts gained by 182.9K, while rural Housing Starts measured in at 17.2K. Later this morning, the Bloomberg Nanos Confidence Index will update for the week ending August 8, 2014. The Index most recently measured in at 58.9 which is the lowest level since June of this year. It is quiet south of the border without any economic data on the schedule for today. Releases will pick up again tomorrow, headlined by the Monthly Budget Statement for July.

Following this morning’s update to Housing Starts, focus this week shifts to the Manufacturing Sales data scheduled for Friday, August 15, 2014. After last week’s unimpressive employment data, the Bank of Canada can delay taking an aggressive approach with their interest rate decisions. The Bank of Canada has stated that they are waiting to see continued strength throughout the economy before considering a rate adjustment. The latest update to employment only seems to delay the possibility of a rate increase even further into the future.

There are many important releases scheduled throughout the United States this week. Retail Sales are forecast to increase by 0.2% for July, matching the gain in the previous month. The Import Price Index is expected to decline by 0.4% after a gain of 0.1% in the previous period. On Friday, an update to the Producer Price Index is expected to show an increase of 0.1% for July after gaining by 0.4% in the latest release. The releases this week will all factor into the discussions at the next Federal Reserve Rate Decision, scheduled for mid-September.

In the currency markets, the Canadian dollar has made early gains against its U.S. counterpart following the better than expected Housing Starts data. Currently, it is expected to see the Federal Reserve lead the Bank of Canada in interest rate hikes as we move forward, leading to a weaker CAD versus the USD. Although Governor Poloz has never stated that he wants a weaker currency, it is implied that a lower CAD is required to increase exports to help the economy fully recover. Governor Poloz will maintain his neutral tone until we see continued economic strength over a long period of time, compared to the short streaks of strength followed by disappointing figures that we have been seeing recently.

Todays expected range: 1.0905 – 1.1005

Source: Bloomberg

Posted by Concentra Financial Markets

Spot On With Your Member Needs

481457829Spot, T+1, swap …sounds like a bunch of jargon, right? Maybe. But, a little jargon is necessary and getting to know industry terms such as Spot transactions can help you talk to your members about foreign exchange trading.

A Spot transaction is the exchange of one currency for another and is the most common transaction in the foreign exchange market. For example, if a member executes a Spot trade to sell USD 100,000.00 at 1.1000 she is consequently buying CAD 110,000.00.

Business owners who are buying and selling products in the U.S. require foreign exchanges services such as Spot trading.

Watch this demo video and see how easy it is to execute a spot transaction using the Concentra FX trading system.

Would your credit union like to add foreign exchange services to your menu of offerings? With our industry-leading foreign exchange services and experts, we can make that easy and profitable for your credit union. Find out how by contacting the Concentra FX team or 1-306-566-1747.

Weekly Economic Update

In Canada this morning, the Bloomberg Nanos Confidence Index will update for the period ending August 1st, 2014. The index most recently measured in at 59.7, with a score above 50 suggesting net positive economic views. South of the border, the Markit US Services PMI for July is expected to release at 60.8, down slightly from 61.0 in the previous period. Factory Orders are forecast to increase by 0.6% for the June period after a drop of 0.5% in the latest release.

Focus this week throughout Canada falls on the employment data scheduled to release Friday, August 8th. The Unemployment Rate is expected to stay unchanged at 7.1% while the Net Change in Employment is expected to show a gain of 22.0K for the July period. The job market in Canada remains a key indicator for the Bank of Canada and Governor Poloz to consider when they hold their monthly rate meetings. Governor Poloz has maintained a neutral view of the Canadian economy; however, with continued strength in employment numbers, we could see him shift to a more aggressive tone.

It is a light week throughout the United States in terms of economic data. Headlines will include updates to the Trade Balance and Wholesale Inventories. The Trade Balance is expected to release at -$44.8B for June, slightly lower than the previous release of -$44.4B. Wholesale Inventories are forecast to increase by 0.7% on a month over month basis for June, following a gain of 0.5% in the latest release.

In the currency markets, the Canadian dollar has fallen against its U.S. counterpart in early trading this morning following the release of weak economic data out of China combined with low equity markets and dropping oil prices. The CAD has lost 3% since its July 3rd high. Focus for the CAD this week falls on Friday’s employment data out of Canada. Strong employment data would increase investor confidence leading up to the next Bank of Canada meeting, providing strength to the Canadian dollar, while weak employment data could lead to the currency falling further against the USD.

Todays expected range: 1.0905 – 1.1005

Source: Bloomberg

Posted by Concentra Financial Markets

 

UPDATE – Concentra staff fundraising to build home in Kenya

In our blog post on March 4, 2014, we shared news of our project to support Mission:180, an organization committed to make a difference in Kenya by building homes for orphans and widows and in working with them to create a future with education and employment opportunities.

In early 2013, we set a fundraising goal of $50,000 to build a Concentra ‘Forever Home’ with the hope to have it fully funded by end of December 2014. Through the support from payroll pledges, jeans days, 50/50 draws, e-bingos, a turkey dinner, and many other activities, so far we have raised $50,735!

Continue reading “UPDATE – Concentra staff fundraising to build home in Kenya”