Daily Economic Update

Markets await Tuesday's Fed rate-setting decision

There are no major economic data releases today in Canada and only one - the Empire manufacturing survey for September - in the United States, leaving markets to focus on tomorrow's FOMC rate-setting meeting.

Canada's data week ahead

This week will bring a good cross section of domestic indicators for the consumer and inflation. On the consumer side, car sales for July will be reported on Tuesday and retail sales on Friday. Inflation measures for August will be out on Wednesday and wholesale trade numbers for July on Thursday.

U.S. economic data calendar this week

Today's U.S. Empire manufacturing survey report showed that the overall index fell more than expected in September to 14.7 from the prior read of 25.1. The consensus call had been for a reading of 18. The decline was driven by new orders, shipments and delivery time. However, only one indicator - unfilled orders - rests in contractionary territory. The index has fallen to the very bottom of the range generally in place since 2003. However, it remains in positive territory and well above the temporary drop experienced at the beginning of 2007.

The big event on Tuesday will be the Fed's rate setting announcement at 2:15 p.m. Inflation measures to be reported this week include the producer price index for August on Tuesday morning and the headline and core CPI for August on Wednesday. Wednesday will also bring the housing starts results for August. Thursday will complete the week's release calendar with weekly jobless claims, the leading indicator index for August and the Philadelphia Fed index for September. There are no U.S. economic reports scheduled for Friday.

RBC Financial Group

US Empire Manufacturing Sees Worst Drop Since March

A survey of manufacturing activity in the New York region printed considerably worse than expected, with the headline index a whopping 10.36 off of its August pace. The shocking drop came on a tumble in new orders, with the sub-index at its worst since May. This unsurprisingly led to a sharp drop in Shipments at 5.09 from 28.82.

Yet all was not lost on the relatively significant manufacturing index, as Prices Received actually rose to 11.70 from 3.23 previous. Prices Paid were likewise elevated at 35.11--up 0.7 from August levels.

Canadian Capital Inflows Turn Positive For First Time Since April

Canadian International Securities Transactions (JUL)

Actual: C$1.502B
Expected: -C$4.500B
Previous: -C$4.330B (R+)

Canada's second trade indicator, the international securities transaction balance (a measure of net purchases of Canadian securities), posted a much better than expected C$1.502 billion surplus. This clearly outperformed the C$4.5 billion deficit expected and the C$4.33 billion deficit recorded back in June. This was further the first positive balance in three months. Looking to the breakdown, interest in Canadian equities was clearly supporting the headline number. The net increase in Canadian stock purchases measured C$2.47 billion. At the same time, investment in bonds was nearly balanced at a C$345 million positive gap. On the other hand, money market interest clearly plunged with a C$1.32 billion deficit that represented the rising volatility through the month. It will be interesting to see how the balance changes next week under the influence of the global credit rout that has catalized volatility in nearly every asset class across Canada.

In the mintues after the release, USDCAD was little changed after testing new lows earlier in the morning.

By DailyFX

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