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Some Canadian High-Impact Reports Alongside US NFP
bank of canada
Ivy School of Business PMI Report
Bank of Novia Scotia
Why do the Canadians share their high-impact economic reports on the same day the US issues the Non Farm Payroll (NFP) Report? Perhaps they are used to living in the shadow of their southern neighbors. Today in the US, of course, the dominant news is the August NFP Report. The guesses are for the NFP to be 180K, up from 162K in the prior month. We also get the US Unemployment rate for August, estimated to remain unchanged at 7.4%.
The Canadian reports are similar - the Employment Change, expected to be a positive 20K versus -39.4K in the prior month, and the unemployment rate of 7.2%, unchanged from the prior period. The Canadians have a bonus report, the Ivy School of Business PMI Report. The last Ivy Report forecast was 48.4, a level that signaled a contraction. The forecast for today's report is expected to be 53.
Recent US Stats have been positive. Consequently, traders are expecting the Fed to make a slight reduction in their rate of debt purchases should the US numbers not reveal a surprise. Anticipating tapering to commence, there is little change in US equities today and the US ten-year bond yield has gone up to 3% area.
What happens if the US numbers fall short of expectations? This is not what is priced into the market. We do not know what numbers the Dept. of Labor will give us, but there is a Gallup poll circulating that the US Unemployment rate is really in the vicinity of 8.5%.
Recently, the USDCAD (FXC,USD) had been trading in the near 1.05. A surprise might jolt the CAD out of the range and the USD would trade toward the 1.03 handle. Even without a USD surprise, the loonie may have some value here.
Click to Enlarge USDCAD Daily Forex Chart
Canada is the biggest supplier of crude oil to the US. WTI crude, trading at 1.0850, is the highest price in years. Though the Canadian oil trades at a discount, this price still gives the Canadians, a hearty balance of payment boast.
Another reason for Canadian optimism is the recovery in the demand for real estate. Latest year-on-year sales increases were sharply higher, up 52.5% in Vancouver, up 27.5% in Calgary, and 21% in Toronto. Granted the number are against weak sales a year ago. August of 2012 was the first month after Canadian FM Flaherty had tightened mortgage rules. It hurt real estate activity then but business is now picking up.
The real estate market has become so hot that the Bank of Nova Scotia's chief executive officer Rick Waugh says the Bank of Canada should hike the bank rates. It may be a while before they talk of a US rate hike.
At about a 5% discount to the USD, we think the Canadian has some value. As always, manage your money.
About the Author, Ralph Shell
: Traded personal account profitably for 19 of the 20 years at the CBOT. Ranked as one of the top five Forex opinion leaders on SeekingAlpha.com. Extensive career as a commodity broker and trader, formerly a commodity broker and grain analyst for Merrill Lynch in Chicago. Member of Chicago Board Of Trade for eighteen years. Floor broker for the Sparks Division of Refco for nine of those years. Also a former member of the Kansas City Board of Trade and the Minneapolis Grain Exchange. Floor trader for over twenty years, specializing in soy beans, wheat and the grains. Ten years as grain merchandiser for Continental Grain Company. Grain trading career included five years in the export grain markets as a wheat and then a soy bean trader. Also traded barge grain out of St Louis, and was the Assistant Manager of the South West Region of the US. First foreign exchange contracts in futures and options over 30 years ago well before the days of online retail fx trading. Today, Ralph is involved exclusively with analyzing and trading the forex market.
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