Remainder of the Economic Data Week in Review

Daily Forex Fundamentals | Written by RBC Financial Group | Sep 10 08 13:42 GMT |

United States - There are no U.S. economic data reports today. The significant releases for the remainder of the week include the international trade balance for July on Thursday and retail sales for August and the producer price index (PPI), also for August, on Friday.

The trade deficit improved much more than expected in June to US$56.8 billion from US$59.2 billion May, reflecting a 4% surge in exports that more than offset a 1.8% gain in imports. Some of the strength in the food (8.8%) and industrial materials (8.1%) components reflected higher commodity prices, while the strength in the automotive component (5.6%) may have been boosted by the ending of a strike at a key auto-parts supplier. Looking ahead to July, commodity prices started to move lower while the strike impact is expected to have waned, suggesting that exports could retrace a portion of June’s increase, falling 1% in the month.

The July PPI report showed unexpected pressure both in the sizeable 1.2% rise in the overall measure and the 0.7% jump in the core component. For August, weekly data is suggesting that gasoline prices likely declined by a more sizeable 6% in the month along with some modest retracement in the other energy components. Declining energy prices are expected to more than offset a minimal 0.1% gain in core prices that will send the overall index down 0.4% in the month.

Retail sales are expected to rise 0.4% in August, more than reversing the 0.1% drop in July, which was largely concentrated in the auto component. Preliminary unit auto sales for August indicate that sales activity rebounded and we are assuming that the July drop will be fully reversed. Weekly numbers suggest that the pace of gasoline price declines accelerated in August and are expected to result in a drop in gasoline receipts of 3% in the month. The weakness in service station sales will likely keep retail sales ex autos flat.

Canada - The next major data release will be the international trade balance for July on Thursday. The trade surplus surprised on the upside in June, rising to C$5.8 billion from C$5.2 billion in May. The improvement reflected a 3.1% surge in exports that more than offset the restraining impact of a 2% rise in imports. The rise in exports was led by an 11.5% jump in the energy products and a 7.7% rise in the auto component. In July, oil prices started to level out and are, thus, not expected to support nominal export growth to the same extent as in June. Similarly, auto export growth is expected to moderate as the strike impact wanes. With limited moderation expected in import growth, the surplus is expected to drop back down to C$5.2 billion in July.

RBC Financial Group
http://www.rbc.com

The statements and statistics contained herein have been prepared by the Economics Department of RBC Financial Group based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities.