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"OECD predicting Canada's GDP weaker through 2010 "..
"The uncertainty is caused by combination of both positive and negative factors"
Although
Canada led in economic growth in the first quarter of 2010, the
nation’s economy has slipped far behind the robust growth seen in
Europe in recent months and will continue to be moderate in the second
half of the year, according to the Organization for Economic
Co-operation and Development’s Interim Economic Assessment released
Thursday. While Canada’s gross domestic product led the Group of
Seven major economies in the first quarter of 2010 with annualized
quarter-on-quarter GDP of 5.8%, in the second quarter, its GDP fell to
just two per cent, far below Germany’s nine per cent growth and the
U.K.’s 4.9%. The United States saw 3.7% growth for the first quarter of
2010 and just 1.6% growth in the second quarter. “The uncertainty
is caused by a combination of both positive and negative factors,” OECD
Chief Economist Pier Carlo Padoan said in the release. “But it is
unlikely that we are heading into another downturn.” However, the
OECD stressed overall recovery may be slowing faster than previously
anticipated. Growth in G7 nations is expected to be around 1.5% on an
annualized basis in the second half of 2010 compared with the previous
estimate in the OECD’s May Economic Outlook of about 1.75%. “The loss
of momentum in the recovery is temporary although uncertainty has
increased,” the report said. If the slowdown in the recovery
becomes entrenched, and the risk of downturn increases, additional
monetary stimulus in the form of quantitative easing and near-zero
interest rates for a longer period may be necessary, Mr. Padoan said. Based
on the most recent data, the OECD short-term forecasting models show
Canada’s GDP is expected to rise by 2.2% in the third quarter of 2010
and 2.3% in the fourth. Germany’s GDP is expected to slow to 0.7% in
the third quarter and 1.1 per cent in the following quarter, while the
U.K. is projected to have 2.7% growth in the third quarter and then
1.5%. U.S. GDP is expected to rise by two per cent in the third
quarter but moderate to 1.2% in the next three-month period. In Japan,
growth is forecast at 0.6% in the third quarter and 0.7% in the fourth.
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"USD- GDP numbers very positive in the 2Q.."
"CAD- GDP numbers decrease for the month of July.."
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The U.S. economy grew at a 1.7
percent annual rate in the second quarter, marking the start of a
slowdown in growth that has concerned the Federal Reserve.
The
world’s largest economy grew 3.7 percent in the first three
months of the year and 5 percent at the end of 2009.
Economists surveyed this month projected little pickup in
growth for the rest of the year as a jobless rate hovering close
to 10 percent hobbles consumer spending and housing languishes
around record lows. Stocks and Treasury securities have rallied
since Fed policy makers said Sept. 21 that they were prepared to
do more to spur the economy and prevent prices from falling.
“The soft patch in the second quarter was pretty severe,”
John Herrmann, senior fixed-income strategist at State Street
Global Markets LLC in Boston, said before the report.
“Unemployment will stay pretty close to where it is now as we’re
moving at a slower pace of growth than we’d like to see. This is
an economy that’s still healing and needs ongoing nurturing by
the government and the Fed.”
The country’s real gross domestic product fell 0.1 per cent in the month, the first monthly drop since last August, Statistics Canada said Thursday.
“Manufacturing, retail and wholesale trade, construction and forestry all posted decreases,” the report said.
Increases were tallied in the mining sector and, to a lesser extent, in some financial industries and the public sector.
The result was in line with economists’ expectations. The Canadian economy shrank for the first time in 11 months in July,
another clear sign of a slowdown, as factories, construction and
consumer activity all posted declines.
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| Currency Commentary
EUR, USD, CAD, GBP & JPY
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EUR: The Euro Dollar uptrend has extended on Thursday in spite of Spain's
debt downgrade and Banking concerns in the region, and, fuelleb by
better than expected employment data in Germany and higher CPI, the
pair has extended past 1.3645 to hit a fresh 5-month high at 1.3675.
USD: Very positive data came out from U.S. data today, the USD/CAD has dropped 100 pips since 8am this morning. Will this bearish trend continue once North American equity markets open?
CAD: Overall a very positive day for buyers of USD once again. Even though the CAD had not too impressive GDP numbers, the U.S. data has given more strength to the CAD today.
Today's range expect between high 1.0100 to higher 1.0200 levels. Investors reaction to the strong data will determine the trend for the USD/CAD...and we may see...lower 1.0100 levels all dependant on reaction.
The markets are setting up for an interesting trading day tomorrow.
GBP: The Pound's rally from 1.5760/70 lows yesterday extended above 1.5900, and
the pair hit a fresh 7-week low at 1.5925, where it was rejected,
dropping about 100 pips to 1.5825.
JPY: The Dollar has been trading lower since the BoJ intervention and from
85.95 high on Sept 17, the pair has dropped to 83.20 low on early
European session , and remains moving at levels less than 50 pips above
pre-intervention low -82.95.
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| Technical Ranges
CAD, USD, EUR, JPY & GBP
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 USD/CAD
Support: 1.0174 Resistance: 1.0281
CAD/JPY
Support: 80.45 Resistance: 81.78
EUR/CAD
Support: 1.3845 Resistance: 1.4090
EUR/USD
Support: 1.3559 Resistance: 1.3731
GBP/USD
Support: 1.5739 Resistance: 1.5921
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| Main USD/CAD data today: |
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1. USD- GDP, Initial Jobless claims & Personal Consumption data.
CAD - GDP data.
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