Some of the secondary data to be released next week will be new factory orders, ADP employment and Canadian Ivey PMI. There will also be a flurry of Fed speakers throughout the week.

It will also be a shortened trading week with markets closed on Monday for the Labour Day.

The Bank of Canada is one of five central banks that will discuss monetary policy this week. Traders expect the bank to leave rates at 3.00%.

David Duggan, fixed income trader at the National Bank of Canada, said looking at BAX futures, markets are expecting the bank to cut rates as the global economy slows.

He added that although the market reflects interest rates cuts, traders aren't expecting a move any time soon.

"I don't know too many traders who really believe that we are going to see a cut in interest rates before the end of this year," he said. "Can you step in front of the price action? No."

Mark Frey, vice-president of FX trading at Custom House, said he is not expecting the Canadian central bank to make any significant moves. He added although the economy is weak, it is showing signs of recovery, especially with the U.S. economy displaying signs of improvement.

"I have a hard time believing in a cut at this point. We have relatively low stable inflation and growth is slowly recovering and I don't think the Bank of Canada will want to move rates," he said.

The second major release in Canada is the employment report for August. Frey said he is expecting another weak report, which could cause a sell-off in the loonie.

He added over the long term, he expects the USD/CAD to move through the 1.07 level.

In the U.S., the upcoming week is all about Friday's nonfarm payrolls, which economists are expecting to remain weak.

George Adell, fixed income strategist from Commerce Capital Markets, said the employment numbers are going to set the tone for the rest of the month. He said continued weakness in the labour market will help to boost bonds. In the long term, he said he doesn't expect the employment numbers to have an impact on Fed monetary policy.

Ed Yardeni, president and investment strategist from Yardeni Research, said the data so far shows that the economy continues to muddle through. He added the loss in employment hasn't been as great as in previous recessions.

"Most economists were expecting to see the economy weak in the first half and stronger in the second half and they are starting to reverse that," he said. "I think what people are looking for is if the strength in the first half will carry through to the second half."

"We are also clearly going to have continued weak employment but for a recessionary environment the employment losses have been as severe as in the past," he added. "But productivity is up and workers are productive."

John Ryding, economist at RDQ Economics, said he agrees that the employment numbers are going to be the key indicators next week.

"The ISM data and ADP are going to be important but they are just leading up to Friday's report," he said. "The key to the consumer and economic growth is the employment data."

All times in EDT:

Monday:

Markets are closed for the Labour Day, but two Fed speakers will be talking aboard. Fed Governor Randall Kroszner and Kansas City Fed President Thomas Hoenig will speak in Argentina.

9:30 US Fed's Kroszner Speaks in Buenos Aires on the Financial System

14:45 US Fed's Hoenig Speaks in Argentina on Financial Turmoil

Tuesday:

Summer holidays are officially over, and the highlight of the day will be the U.S. ISM manufacturing survey, which is expected to come in at 50.0, matching the previous reading of 50.0

10:00 US ISM Manufacturing August Exp: 50.0 Prior: 50.0

10:00 US ISM Prices Paid August 82.0

10:00 US Construction Spending (M/M) July Exp: -0.4% Prior: -0.4%

13:00 US Treasury to Sell $27B 3-Month Bills 2-Sep

13:00 US Treasury to Sell $26B 6-Month Bills 2-Sep

17:00 US ABC Consumer Confidence 31-Aug Exp: -50 Prior: -50

Wednesday:

The focus of the day will be on the Bank of Canada's interest rate decision. The consensus is for the bank to hold rates at 3.00%.

In the U.S., markets will receive July factory orders, which are expected to rise 1.0% following June's rise of 1.7%. Meanwhile, Boston Fed President Eric Rosengren will speak at an event in Manchester, New Hampshire.

7:00 US MBA Mortgage Applications W/E August 29 Prior: +0.5%

7:30 US Challenger Job Cuts (Y/Y) August Prior: +140.8%

9:00 CA Bank of Canada Rate 3-Sep Exp: 3.00% Prior: 3.00%

10:00 US Factory Orders July Exp: +1.0% Prior: +1.7%

12:15 US TSY's Swagel to Speaks in San Francisco

12:30 US Boston Fed's Rosengren Speaks in Manchester, New Hampshire

13:00 US Treasury to Sell 4-Week Bills

14:00 US Fed Releases Beige Book Economic Report

September 3 US Domestic Vehicle Sales August 9.4M

September 3 US Total Vehicle Sales August Exp: 13.0M Prior: 12.5M

Thursday:

Markets will be dissecting employment data ahead of Friday's nonfarm payrolls report. ADP employment is expected to show a 30,000 job loss, following a 9,000 job gain in July.

The ISM non-manufacturing composite is expected to come in at 49.5, matching July's reading of 49.5. Economists will also be interested to see the employment component of the report to get a sense of Friday's official numbers.

Two Fed members will speak during the day. Dallas Fed President Richard Fisher will speak in Houston, Texas and San Francisco Fed President Janet Yellen will speak in Salt Lake City, Utah.

8:15 US ADP Employment Change August Exp: -30K Prior: 9K

8:30 US Nonfarm Productivity 2Q Final Exp: +3.5% Prior: +2.2%

8:30 US Unit Labor Costs 2Q Final Exp: +0.1% Prior: +1.3%

8:30 US Initial Jobless Claims 30-Aug Exp: +420K Prior: +425K

8:30 US Continuing Claims 23-Aug Exp: 3423K Prior: 3423K

10:00 US ISM Non-Manufacturing Composite August Exp: 49.5 Prior: 49.5

10:35 US EIA Natural Gas Storage Change 29-Aug Prior: +102 Bcf

11:00 US DOE U.S. Crude Oil Inventories 29-Aug Prior: -3502K

11:00 US DOE U.S. Gasoline Inventories 29-Aug Prior: -1179K

11:00 US DOE U.S. Distillate Inventory 29-Aug Prior: +57K

11:00 US DOE U.S. Refinery Utilization 29-Aug Prior: +1.58%

12:00 US TSY's Swagel Speak at Berkley California

13:40 US Fed's Fisher Speaks in Houston on U.S. Economic Challenges

14:30 US Fed's Yellen Speaks in Salt Lake City on U.S. Economy

September 4 US Mortgage Delinquencies 2Q Prior: +6.35%

September 4 US ICSC Chain Store Sales (Y/Y) August Prior: +2.6%

Friday:

Friday will be all about employment. Canada's August employment report is expected to show a rise of 10,000 jobs, following July's loss of 55,200 jobs. The unemployment rate is expected to tick higher to 6.2% from July's rate of 6.1%.

In the U.S., nonfarm payrolls are expected to show a ninth consecutive decline with a loss of 75,000 jobs following July's decline of 51,000. The unemployment rate is expected to remain steady at 5.7%.

The Canadian Ivey PMI will also be released and is forecasted to decline to a reading of 62.0 following July's level of 65.5.

San Francisco Fed President Janet Yellen will speak for a second day, this time at an event in Los Angeles, California.

7:00 CA Unemployment Rate August Exp: 6.2% Prior: 6.1%

7:00 CA Net Change in Employment August Exp: +10.0K Prior: -55.2K

8:30 US Change in Nonfarm Payrolls August Exp: -75k Prior: -51k

8:30 US Unemployment Rate August Exp: 5.7% Prior: 5.7%

8:30 US Change in Manufacturing Payrolls August Exp: -35K Prior: -35K

8:30 US Average Hourly Earnings (M/M) August Exp: +0.3% Prior: +0.3%

8:30 US Average Hourly Earnings (Y/Y) August Exp: +3.4% Prior: +3.4%

8:30 US Average Weekly Hours August Exp: 33.6 Prior: 33.6

10:00 CA Ivey Purchasing Managers Index August Exp: 61.5 Prior: 65.5

15:55 US Fed's Yellen Speaks in Los Angeles on U.S. Economy

By Neils Christensen, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it

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