Forex Investment and Currency Trading

Friday May, 9th
 
Canadian Economic Data and Events         

• 07:00 April Employment Change
• 07:00 April Unemployment Rate        
• 08:30 March International Merchandise Trade                     

Employment likely mustered a slightly below-trend gain in April.  On the negative side, employment growth may have been weaker in the transportation and warehousing sector after a large gain the prior month.  However, on the plus side, an increase in the information, culture and recreation sector is probable after the outsized decline in March, which represented the second largest drop since 2002.  In the first quarter, employment advanced by a solid 104.0K.  Roughly half of that growth was accounted for by the construction sector.  With the housing market set to cool, employment in the sector may follow suit.  More generally, market is expecting employment growth to moderate in coming quarters, as GDP continues to advance at a sub-trend pace.  This will result in the unemployment rate (forecasted to remain unchanged in April) trending higher through the forecast horizon, which will put modest downward pressure on consumer spending, contributing to a slight easing in domestic demand growth.  

Import growth likely slightly outpaced that of exports leading to a drop in the merchandise trade balance.  Market is forecasting an increase in nominal exports. However, much of the support to nominal exports likely came from robust gain in commodity prices (the Bank of Canada Commodity Price Index was up 5.0% in March). However, a strike in the auto-sector may have hampered growth.  Meanwhile, market is expecting a rebound in imports after February’s 2.0% decline, in-line with still decent domestic conditions.  Over January/February real merchandise exports were down an annualized 1.0% on average, managing to deteriorate further after the 8.7% drop seen in the fourth quarter.  However imports on a volumes basis have fallen an even greater 3.0% thus suggesting that net trade could be a small add to growth in the first quarter.  We suspect that this dynamic will be unique to Q1 as Canadian growth will likely outpace that of the U.S. leading net trade to be a big drag on the economy going forward.   

US Economic Data and Events                                                

• 08:30 March Trade Balance

Market expects the trade balance to have narrowed very slightly in March after the unexpected deterioration in February.  Exports likely increased, though a decline in durable goods shipments suggests a muted gain.  Meanwhile, market looks for nominal imports to have advanced slightly, with a big assist coming from surging crude oil prices though subdued domestic activity indicators suggest a modest increase.  Business has been booming for exporters, as they have benefited from decent global growth and a very weak dollar.  Market is expecting another strong gain in exports this year, but at a slower pace owing to softer global growth.  Anemic growth in the domestic economy will weigh down the pace import activity.  Net trade is expected to add 0.5 percentage points to growth this year, which will help offset continuing declines in residential construction.