Trade figures, housing starts and prices to headline economic news

The impact of the high-flying loonie, which broke above parity with the U.S. greenback on Friday, is expected to make its mark on Canada’s trade figures this coming Wednesday.

Consensus estimates call for the trade deficit to continue to linger in September, growing to $1.6-billion from $1.3-billion the month before. It will be the fifth straight month for trade to register in the negative column.

CIBC has a slightly more optimistic outlook, calling for the deficit to fall to $1-billion, but even at that it will combine to produce the worst quarterly trade balance in decades, economist Krishen Rangasamy forecasts.

His outlook is based on improved auto production, which tends to show up not long after in the country’s exports.

Yet he cautioned: “The fact that we’re in recovery and still running deficits shows the damage of the high dollar to trade in Canada.

“This has basically eroded our market share in the U.S. and this is reflected in what we’re seeing recently . . . which basically tells you that even if U.S. demand is picking up, we’re not capitalizing on it.”

Trade data will also be released in the U.S. on Wednesday, where expectations are for a slight improvement. The American trade deficit is expected to edge down to $45-billion from $46.3-billion in September, thanks to softer oil and gas import prices.

Weakness in Canada’s domestic economy, meanwhile, will likely show up in the latest monthly data on housing starts. October’s data, to be released Monday, is expected to show starts falling to 182,000.

The figures has been trending down since April, when new home construction crested at 205,700 units.

The data may surprise to the upside, however, considering the 15.3% surge reported Friday in the value of building permits, Rangasamy said.

The house price index, reported Tuesday, is expected to show average prices rising 0.1% in September after rising by the same amount the month before.

With the U.S.midterm election and the Federal Reserve’s decision on quantitative easing now out of the way —a light week for data —investors’ attention is expected to turn back to the earnings season, with many Canadian companies left to report third-quarter figures.

On Thursday, Canada’s bond market is closed for the Remembrance Day Holiday while the treasury market is closed in the U.S. for the Veteran’s Day Holiday.

Source: Postmedia News