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					Global Economic Research                                                                                       November 5, 2012 @ 07:35 EST

CAPITAL MARKETS RESEARCH
Derek Holt (416) 863-7707
derek.holt@scotiabank.com
                                                                                          Daily Points                    — Tracking the Numbers
Dov Zigler (416) 862-3080
dov.zigler@scotiabank.com



                        On Deck for Monday, November 5                                                                          BoC Events


 Country Date Time Indicator                           Period   BNS       Consensus        Latest
                                                                                                                   BoC Overnight Lending Rate
   CA    11/05 08:30 Building Permits (m/m)             Sep      --          -2.8            7.9
                                                                                                                   Current Rate: 1.0%
   US    11/05 10:00 ISM Non-Manufacturing Composite    Oct     55.0         54.5           55.1                   Next Move: Dec. 4 @ 1.0%
                                                                                                                   Bias: Neutral


KEY POINTS:
 Markets taking risk off the table to start the week
 Australia’s economy looking soft…
 ...ahead of RBA rate decision tomorrow
 Indonesia GDP reflects weaker regional outlook
 UK services PMI ticks lower
 Indian PMIs pointing to broad slow-down
 Canada building permits to remain elevated?                                                                                   Fed Events
 US ISM Manufacturing expected to drop
                                                                                                                   Fed Funds Target Rate
INTERNATIONAL:                                                                                                     Current Rate: 0-0.25%
Markets are taking risk off the table with major European equity indices                                           Next Move: Dec. 12 @ 0-0.25%
selling off and safe haven bond markets and the USD bid to start the week                                          Bias: Dovish
while North American equity futures are pointing to a flat open. The catalyst
is probably not a fairly uneventful G-20 meeting over the weekend, but
rather soft earnings out of a global bank early in the European trading session
today and uncertainty over a key vote due to take place in Greece on
Wednesday as the government tries to ram through austerity measures that
are strong enough to placate Greece’s creditors and yet somehow palatable to
a coalition government that was largely elected on anti-austerity platforms.
Of course there’s the matter of U.S. elections tomorrow…

Asian regional economic growth continues to be a concern via three key data
releases overnight. First, while Australia’s trade deficit narrowed in
September to A$1.45bn from A$2.03bn in August, the smaller deficit was
mostly a result of weaker imports, which declined by A$577m, while exports
declined by a smaller A$158m. While the softer imports number did not                                                 Key International Events
necessarily reflect weakness on the part of domestic consumers in September
(retail sales data released overnight showed an increase of 0.5% m/m during                                       BoJ
September in nominal terms), the bigger picture issue is that Australia’s                                         Current Rate: 0.10%
                                                                                                                  Next Move: Nov. 20 @ 0.10%
domestic economy is looking somewhat sluggish – much as the RBA had                                               Bias: Dovish
predicted that it would when it began a rate cut cycle earlier this year.
Inflation-adjusted retail sales for Q3 declined by 0.1% q/q according to data                                     BoE
released today, and the combination of weak domestic demand and a weaker                                          Current Rate: 0.50%
                                                                                                                  Next Move: Nov. 8 @ 0.50%
export profile explain why markets are looking for an additional 25bps rate                                       Bias: Dovish
cut when the RBA makes a policy announcement tomorrow.
                                                                                                                  ECB
Second, Indonesia’s GDP came in at +3.2% q/q for Q3 (+6.2% y/y), in line                                          Current Rate: 0.75%
                                                                                                                  Next Move: Nov. 8 @ 0.75%%
with consensus. The good news is that growth remains decently strong. The                                         Bias: Neutral
bad news is that exports were a drag on growth, at -0.2% q/q, again
providing a glimpse at how softer regional growth is impacting the Asian
trading economies.
                                                                This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank.
Scotiabank Economics                                            Opinions, estimates and projections contained herein are our own as of the date hereof and are
                                                                subject to change without notice. The information and opinions contained herein have been
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Global Economic Research                                                                                                                               November 5, 2012

                                                                                                                                                        Daily Points

Third, India released its services PMI overnight as well and it showed a moderate deterioration to a reading of 53.8 from 55.8 in
September. The good news with respect to India’s business survey data is that the manufacturing PMI held steady in October –
at an essentially identical reading to its levels of July through September. The bad news is that this period has coincided with
extreme softness in India’s industrial economy.

The UK’s services PMI dropped to a reading of 50.6, which dragged the composite index down to just below 50. Scotia’s UK
economics team notes that while the relationship between the services PMI and the performance of the UK’s services sector is
not that strong, the implication from today’s data is that the underlying pace of growth in the services sector is weak, dampening
the outlook for Q4 GDP on the margin.

CANADA:
How long will Canada’s ongoing condo building boom last? While there has been a meaningful drop-off in the pace of existing
home sales in a number of Canadian metropolitan areas, the main short-term leading indicator for new home construction is
building permit data, due out today at 8:30amET – and the building permits numbers remain quite strong. The key aspect of
this data release is the break-down between permits issued for the construction of new multi-unit housing and single-family
homes as the former has been driving Canada’s residential construction sector throughout the year, a trend which we expect to
slow at some point. Note as well that not all building permits turn into construction starts, and we expect the relationship
between permits and housing starts to deteriorate at some point in line with the weaker resale volumes.

UNITED STATES:
The North American data docket will be quiet ahead of the U.S. elections tomorrow, with data risk in the U.S. today confined to
the release of the ISM non-manufacturing composite for October (10:00amET). While there has been plenty of evidence of a hit
to U.S. business confidence via weak survey data from the manufacturing sector, the ISM survey of non-manufacturing
businesses looks to have bottomed in June and has increased for four consecutive months. The Bloomberg consensus is looking
for a slight decline today to a reading of 54.5 from 55.1 in September.




                                                                                                            Equities                                     % change:
                                                                                                                           Last      Change    1 Day   1-wk    1-mo    1-yr
                                                                                                            S&P/TSX       12380.41   -119.35    -1.0    0.7    -0.3    -0.2
                                                                                                            Dow 30        13093.16   -139.46    -1.1    0.1    -3.8     9.3
                                                                                                            S&P 500        1414.20    -13.39    -0.9    0.4    -3.2    12.8
                                                                                                            Nasdaq         2982.13    -37.93    -1.3    0.0    -4.9    11.0
                                                                                                            DAX            7320.35    -43.50    -0.6    1.6    -1.0    22.7
                                                                                                            FTSE           5834.01    -34.54    -0.6    0.7    -0.6     5.6
                                                                                                            Nikkei         9007.44    -43.78    -0.5    0.9     1.6     2.3
                                                                                                            Hang Seng     22006.40   -104.93    -0.5    2.3     4.7    10.9
                                                                                                            CAC            3460.71    -31.75    -0.9    1.5     0.1    10.8
                                                                                                            Commodities                                  % change:
                                                                                                            WTI Crude       84.94     0.08       0.1    -0.7    -5.5   -9.9
Fixed Income                                 Government Yield Curves (%):
                       2-YEAR                  5-YEAR                 10-YEAR              30-YEAR
                                                                                                            Natural Gas      3.53     -0.02     -0.6     1.8     4.0   -6.6
               Last     1-day 1-wk     Last     1-day 1-wk     Last    1-day 1-wk      Last 1-day 1-wk      Gold          1685.00    -31.25     -1.8    -1.8    -5.1   -3.3
U.S.            0.28    0.28    0.29   0.77      0.72   0.74   1.68     1.72    1.72   2.87   2.91   2.88   Silver          30.91     -1.01     -3.2    -2.9   -11.3   -9.0
CANADA          1.05    1.06    1.10   1.30      1.32   1.37   1.74     1.77    1.81   2.34   2.36   2.40   CRB Index      292.29     -4.60     -1.5    -1.5    -5.0   -8.8
GERMANY        -0.00    0.01    0.03   0.45      0.46   0.49   1.43     1.45    1.46   2.25   2.27   2.33
                                                                                                            Currencies                                   % change:
JAPAN           0.10    0.10    0.10   0.20      0.20   0.19   0.77     0.78    0.78   1.94   1.95   1.95
                                                                                                            USDCAD         0.9969     0.0011     0.1    -0.4    1.9    -1.6
U.K.            0.22    0.26    0.24   0.77      0.81   0.78   1.82     1.86    1.80   3.10   3.13   3.06
                                                                                                            EURUSD         1.2781    -0.0054    -0.4    -1.0   -2.0    -7.2
                                              Foreign - U.S. Spreads (bps):
                                                                                                            USDJPY          80.25    -0.1800    -0.2     0.6    2.0     2.8
CANADA          78       78     81     53         60     63     6        5       9     -53    -55    -49
                                                                                                            AUDUSD         1.0352     0.0015     0.1     0.2    1.6    -0.3
GERMANY         -28      -28    -26    -32        -26    -25   -26      -27     -26    -62    -64    -56
JAPAN           -18      -18    -19    -57        -51    -55   -91      -93     -94    -93    -96    -94
                                                                                                            GBPUSD         1.5971    -0.0050    -0.3    -0.4   -1.0    -0.5
U.K.             -5      -3      -5     -0        9      4      14      14       8     23     22     18
                                                                                                            USDCHF         0.9440     0.0037     0.4     0.8    1.6     4.8

 Source: Bloomberg. All quotes reflect Bloomberg data as at the time of publishing.
 While this source is believed to be reliable, Scotia Capital cannot guarantee its accuracy.



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