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Canada’s Economic Growth Likely to have accelerated in Q1 2017, says Td Economics

Canada’s economy is likely to have grown in the March quarter. According to a TD Economics research report, the Canadian economy is expected to have expanded 4 percent quarter-on-quarter annualized. Most of the growth can be attributable to the 4.6 percent growth in consumer spending, with particular strength expected in durables spending, which rose 12.5 percent given solid auto sales in the quarter. Investment is also expected to have grown healthily. Higher frequency indicators of business investment imply a recovery of non-residential structures investment, with a sounder pace pf growth forecast for residential investment, noted TD Economics. A huge growth in business investment after the earlier quarter’s destocking is expected and likely to have contributed around 2 percentage points to the economic growth. On the other hand, imports are expected to have recovered significantly after the decline recorded in the earlier quarter. Meanwhile, in March, industry-level GDP is expected to have come in at 0.1 percent growth. Growth is expected to have been heavily tilted towards the service sector, with a solid contribution from retail and wholesale activity while another huge rise in existing home sales would underpin the real estate industry. A deceleration in durable goods manufacturing is expected to have been a drag on economic growth in the goods-producing sector. The weak print for March GDP is likely to provide a relatively weak handoff to the second quarter, where growth is likely to moderate to a mid-2 percent rate, stated TD Economics. At 23:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was bullish at 73.9787, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 43.1375. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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Euro Area’s Headline Inflation Likely to have slowed in May, to Drift Further Lower in Months Ahead

Initial estimates of the March quarter indicate that the euro area economy expanded 0.5 percent in the period to keep the growth rate stable at 1.7 percent as the economic growth continues in Europe. In recent months, purchasing manager surveys have reached levels last seen when the European economy dodged a bullet in the wake of the sovereign debt crisis in 2010, noted Wells Fargo in a research report. But despite these upbeat indicators, inflation has not taken off. The year-on-year consumer price inflation of the euro area had come in at 1.9 percent in April, whereas the core CPI had come in at just 1.2 percent. Even though the 1.2 percent core rate was modest, it was a rebound in the rate. If the upward trajectory continues, the European Central Bank might turn hawkish during its June policy meeting. According to consensus expectations, the euro area headline inflation is expected to have slowed to 1.5 percent year-on-year in May from April’s 1.9 percent. Meanwhile, the headline inflation is expected to drift further lower in months ahead, converging towards core inflation by the end of 2017, noted Barclays in a research report. The core inflation is likely to have dropped to 1 percent in May from April’s 1.2 percent. “We forecast headline inflation will average 1.6 percent in 2017 and 1.3 percent in 2018, while we project core inflation (excluding Food, Alcohol, Tobacco and Energy, FATE) will average 1.0 percent this year and 1.2 percent next”, added Barclays. At 22:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at -35.4162, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 43.1375. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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China’s Pmi Index Likely to have dropped in May

On a year-on-year basis, China’s economy expanded 6.9 percent in the March quarter. In the coming week, certain indications for how the second quarter is shaping up will be released with an early indication of business activity in May. China’s PMI measure is expected to have dropped in May from the prior month’s print. This measure had been trending higher; however, it gave up some ground in April. However, the measure continues to be above the 50 line of demarcation and as such is in line with a modest rate of growth. According to consensus expectations, the PMI index is expected to have dropped to 51 in May from April’s 51.2. At 22:00 GMT the FxWirePro's Hourly Strength Index of Chinese yuan was bearish at -97.0327, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 43.1375. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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Canada’s International Goods Trade Deficit Likely widened in April, says Td Economics

Canada’s international goods trade deficit is likely to have broadened in April from March’s deficit. According to a TD Economics research report, the deficit is expected to have widened from $34 million to $500 million in April as a modest rise in exports would be offset by a greater rise in imports. Exports of energy are expected to have recorded a small rise on a nominal basis; however, there is scope for volumes to drop because of a fire at a Syncrude facility in the oil stands that decreased shipments until May, noted TD Economics. Meanwhile, non-energy exports are expected to have recorded a slight rise mainly because of a weaker Canadian dollar and increased factory prices, though there is a threat of a decline after prior month’s large gain. The implementation of new tariffs on softwood lumber is unlikely to have had a huge impact because of the timing of the announcement that will push most of the impact into May. “Imports should post a more moderate advance due primarily to exchange rate effects and continued strength in Canadian household spending”, added TD Economics. At 22:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was bullish at 73.9787, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 43.1375. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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U.s. Nonfarm Payroll Employment Gains Likely slowed in May, Jobless Rate to have remained at 4.4 Pct

The U.S. nonfarm payroll employment is expected to have slowed to a respectable pace in May. According to a TD Economics research report, the nonfarm payroll employment is likely to have risen 170k in May after recording a solid gain of 211k in the prior month. This puts payrolls gains much above their breakeven rate and just below the 3-month average rate of 174k. Record low unemployment claims past survey indicators on balance and unwinding negative weather impacts continue to be supportive of sound job growth. However, ISM nonmanufacturing employment index in particular averaged a subpar 51.5 in the earlier two months, in line with job growth near to 100k. The pullback in the indicator might be transitory as some temporary factors might be at play. The jobless rate is likely to have remained the same at 4.4 percent; however, the risk for a further drop to 4.3 percent is in line with the stable above-trend rate of job gains, stated TD Economics. “We look for a 0.2 percent m/m increase in average hourly earnings in April, factoring in some downward bias from calendar effects. That would leave the year-on-year pace slightly higher at 2.6 percent”, added TD Economics. At 22:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 43.1375. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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U.s. Ism Manufacturing Index Likely to have rebounded in May, says Wells Fargo

U.S. manufacturing sentiment, gauged by the ISM manufacturing index is expected to have bounced back in May after dropping slightly in April. The index had dropped to 54.8 in April from March’s print of 57.2. The production subcomponent continued to indicator improvement, but the new orders component weakened for the month. The closely watched employment component also softened in the month. According to a Wells Fargo research report, the ISM manufacturing index is expected to have risen in May to 55.2. The industrial sector is expected to continue improving gradually in 2017 as global growth starts to strengthen and domestic business investment slowly starts to rebound again. Industrial production is expected to accelerate to about 3 percent in the June quarter, making up for the loss recorded in the first quarter before averaging 2.4 percent in both the third and fourth quarters of 2017, added Wells Fargo. At 21:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 59.5076. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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