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Forex Flash: Canada employment to fall, trade deficit to narrow – TD Securities

TD Securities analysts expect Canada employment to fall –5k in January (mkt +5k) and the unemployment rate to rise +0.1%pt to 7.3% (mkt 7.2%) on account of a modest increase in the labor force: “We believe a pullback in hiring is overdue as employment growth ran well ahead economic activity in the final quarter of 2012”, wrote analyst Richard Kelly, expecting job creation to print +10/15k pm thereafter. 

In regard to Housing starts, they should moderate for a fifth consecutive month to a level of 194k units in January (consensus 195k), and Canada’s international merchandise trade deficit should narrow to $1.0bn (consensus $1.45bn), from the $2.0bn deficit reported in November. “The narrowing reflects strength in exports but weakness in imports. Auto and forestry exports are expected to post gains as reconstruction efforts in the US northeast continue following the aftermath of Hurricane Sandy”, said Kelly, expecting exports to get a lift from the energy and aircraft sectors.

Wall Street turns its sights to Moody’s amidst S&P allegations

The US Justice Department’s decision to sue Standard & Poor’s has left investors pondering why Moody’s Investors Service and Fitch Ratings weren’t targeted for awarding the same top grades towards troubled mortgage bonds and other debt securities. “What purpose does it serve for the U.S. government to bring an action against S&P at this point in time? “At first glance, is this a bid for some sort of retribution for the company’s 2011 downgrade of the U.S.? Moody’s and Fitch assigned the same ratings to these transactions. Why aren’t they named as well?” wrote Bonnie Baha, the Head of Global developed credit at DoubleLine Capital LP, which oversees about $53 billion.
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Did the euro turn the corner?

The single currency has revisited the 1.3400 handle on Friday after around 1.3370 on ‘verbal intervention’ by ECB’s Draghi on Thursday. The current correction would be sustained by renewed hopes of an agreement...
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