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Canadian Employment Sharply Declines; European Growth Expected to Remain Weak in Q3

Friday, 08 August 2008 11:09:35 GMT

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Written by Christopher Vecchio, DailyFX Research

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Fundamental Headlines

•    USDCAD – Canadian employers lost a net 55,200 jobs in July, as the unemployment rate dropped to 6.1 percent. The decline was unforeseen, as estimates predicted a gain of 5,000 jobs during July. Slowing demand for Canadian goods is damaging expansion, evidenced by contracting growth in the second quarter. Weakness in manufacturing is expected to continue amid decreased exports to the United States, due to low American consumer confidence. A highly appreciated Canadian dollar, which has gained 16 percent in the past three years, also contributed. If inflation continues to push the upper limits of the Bank of Canada’s target range, policy makers might be forced to shift to a hawkish bias in order to cool stagflation. Discuss the topic and your trade ideas in the USD/CAD Forum.
•    USDJPY – Economic sentiment continues to fall in Japan, as the Economy Watchers Index registered a reading 29.3, the lowest such reading since the last recession. As inflated prices soften profit,  the Japanese government admitted this week that growth is stalling, and economic conditions rival those from 2001. Companies are being discouraged to hike wages while consumers are being told not to cool spending, all in an effort to boost the economy. However, due to the weak sentiment, global demand will need to increase for Japan to push back recessionary fears. Discuss the topic and your trade ideas in the USD/JPY Forum.
•    EURUSD – Italy’s economy unexpectedly shrunk by 0.3 percent in the second quarter after expanding 0.5 percent in the first. Confidence among households and businesses continues to drop amid high energy costs, which have stoked inflation around the globe. To try to and stimulate growth, economic and political reforms have been implemented, such as reducing state bureaucracy. Despite this. growth is expected to remain “particularly weak” in the third quarter; as Italian growth continues to deteriorate at an alarming pace, economists believe that Italy will begin to slide into its fourth recession. Discuss the topic and your trade ideas in the EUR/USD Forum.

•    Lack of Seats, Galleys Delays Boeings (link) – Wall Street Journal
•    Food Giants Race to Pass Rising Costs to Shoppers (link) – Wall Street Journal
•    Citi and Merrill in $20bn ARS Agreements (link) – Financial Times
•    RBS Posts First Loss in 40 Years on Credit Writedowns (link) – Bloomberg
•    Euro Slumps to Five-Month Low on Reduced Bets for Higher Rates (link) – Bloomberg

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