Event Risk Euro Zone And Canada
Euro Zone – While there is significant event risk behind the euro's economic docket, the hierarchy for fundamental drivers remains: financial crisis, interest rates, growth. As such, any concern that the credit market is freezing, will trump a reading on manufacturing or consumer activity. However, we can only prepare for event risk that can be reasonable estimated. From the docket, the major event risk doesn't come in until later this week and into next week. Friday will bring the advanced readings for economic activity through the current month. The German manufacturing and service – and Euro Zone composite – PMI readings are treated as leading indicators for economic activity across the basic sectors. And, as the first reading of the year's final quarter, it will set the scene for year-end growth forecasts. After the weekend, traders will then move on to confidence figures. The IFO business sentiment report will almost certainly reflect the drop in equity values and the credit market crunch; but the outlook for consumers in the GfK reading will be an unknown.
Canada – Of all the economic dockets this week, Canada's happens to be the most active. Tomorrow, the Leading Indicators and retail sales reports will cross the wires. The former isn't often market moving, but it will offer assistance to growth forecasts. The consumption indicator, however, is among the top market movers. It is certainly a lagging report (recording data from August), so any improvement will be downplayed as it will have come before the influence of the recent credit market turmoil. Later this week, interest rates will come back into view with the BoC's report perhaps shedding more light on their plans for monetary policy going forward after suggesting they would cut further today. For the same reason, a drop in CPI Friday could ease the path to further cuts.
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