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Global Economic Research September 24, 2010

Highlights

Canada Summertime blues for Canadian retailers.

United States The housing market continues to struggleon high unemployment and elevated supply.

Mexico Mexican peso finally rallies more than theCanadian dollar on the back of an improving outlook fordomestic demand.

Latin America Colombian GDP picks up pace in thesecond quarter.

Europe Norways monetary conditions on hold due to

global developments.Asia / Oceania Japanese yen continues to strengthen,taunting intervention.

Industry Gold climbs to a new record high.

Index23456

78910ForecastsCanadaUnited StatesMexico & Developing AmericasEurope & Asia / OceaniaIndustry & CommodityMarket Metrics / Fiscal PolicyEconomic Tables

Financial TablesNew ReleasesScotiabank Commodity Price Index (09/22)Scotia Economics

This Report is prepared by Scotia Economics as a resource for theclients of Scotiabank and Scotia Capital. While the information is from

Scotia Plaza 40 King Street West, 63rd Floor

Toronto, Ontario Canada M5H 1H1

sources believed reliable, neither the information nor the forecast shall

Tel: (416) 866-6253 Fax: (416) 866-2829


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be taken as a representation for which The Bank of Nova Scotia or

Email: [email protected]

Scotia Capital Inc. or any of their employees incur any responsibility.Weekly Trends is available on: www.scotiabank.com, Bloomberg at SCOE and Reutersat SM1C


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Global Economic Research

September 24, 2010ForecastsEconomic Performance (annual % change unless otherwise indicated)2000-08 2009 2010f 2011f 2000-08 2009 2010f 2011f

Canada United StatesReal GDP 2.6 -2.5 3.0 2.3 2.3 -2.6 2.6 2.1Consumer Prices 2.3 0.3 1.8 2.1 2.9 -0.3 1.6 1.4Pre-tax Profits 7.8 -32.3 20.0 11.0 4.4 -0.4 30.0 7.0Federal Budget Balance ($bn) 8.4 -48.0 -43.0 -28.0 -197 -1413 -1340 -1220Current Account Balance ($bn)Merchandise Trade Balance ($bn)20.558.1-43.5-4.6-42.5

-3.8-44.5-6.6-596-648-378-507-483-659-505-711Motor Vehicle Sales (000s)*Motor Vehicle Production (000s)*

Housing Starts (000s)*1,6052,5902071,4611,4251491,5652,2001901,5902,30017516.411.51.6510.45.60.5511.57.80.5812.28.10.88

EmploymentJobs Created (000s)*Unemployment Rate (%)


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0.939.503.600.909.40WTI Oil (bbl)Nymex Natural Gas (US$/mmbtu)

Wheat (tonne)49.936.15223624.15454784.40305804.40

290Financial Markets (end of period, % unless otherwise indicated)CANADA10Q1 10Q2 10Q3f 10Q4f 11Q1f 11Q2f 11Q3f 11Q4f3-month T-bill 0.30 0.61 1.05 1.10 1.60 1.85 1.80 1.955-year Canada10-year Canada2.903.572.333.082.252.902.30

2.852.402.952.603.002.653.152.903.40UNITED STATES3-month T-bill (Yield) 0.15 0.17 0.20 0.25 0.30 0.30 0.40 1.005-year Treasury 2.54 1.77 1.50 1.60 1.65 1.80 1.95 2.2510-year Treasury 3.83 2.93 2.65 2.60 2.75 3.00 3.30 3.60CANADIAN-US SPREADS3-month T-bill 0.15 0.44 0.85 0.85 1.30 1.55 1.40 0.955-year10-year0.36-0.260.560.150.750.250.700.250.75

0.200.800.00


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0.70-0.150.65-0.20Canadian Dollar (USDCAD)Canadian Dollar (CADUSD)Yen (USDJPY)Euro (EURUSD)

Sterling (GBPUSD)Mexican Peso (USDMXN)1.020.98931.351.5212.41.060.94881.22

1.4912.91.060.94841.251.5512.71.050.95851.291.57

12.91.040.96881.321.6012.91.020.98921.341.6213.01.001.00941.361.6513.10.981.02951.381.6913.3


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September 24, 2010CanadaAlex Koustas

(416) [email protected]

Summertime Blues For Canadian Retailers

Retail sales slipped 0.1% in July, marking the fourth straight monthwithout a positive result. A 1.0% m/m increase in auto sales was notenough to counterbalance weakness in most other retail segments,with sales excluding autos dropping 0.4% m/m the fifth decrease inthe past six months.

CANADIAN RETAIL SALES The implementation of the HST had a

& CONSUMER CONFIDENCE

06 07 08 09 10RETAILSALES,LHSCONSUMERCONFIDENCE,RHS3mma, $ bns index120 significant impact on Julys figures, with

37

B.C. and Ontario both showing notable36

110 monthly declines, while an increase in35

100 Nova Scotias sales tax led to a sharp 5.3%90 m/m drop in sales. Excluding these three

34

provinces, the rest of Canada experienced

33

80

a 0.4% increase in sales for the month.

32

70However, the three-month average for

retail sales in the rest of Canada still lands

31


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60

in negative territory, down 0.15%,

30

50 signaling a slowdown in the retail market

especially when auto sales are removedfrom the total.Anecdotal reports show more aggressive discounting by retailers tolure in consumers, which is contributing to lower sales receipts.Nonetheless, sales volumes too have slowed as evidenced by the0.2% m/m drop in volumes in July and very few retail segmentshave shown consistent headline gains over the past four months.Consumer confidence has dropped, with the index peaking in Mayonly to fall to its lowest level of the year in September. Takentogether, it is evident that Canadian consumers are pulling in their

spending and simply buying less (and saving more).While Canadian employment figures have been quite favourable,especially when compared with most other developed nations, itappears Canadians are becoming increasingly cognizant of thesensitivity of the economys performance to economic conditions inthe United States and around the world. While the summersdisappointing results will likely be reversed to some degree by further

ReviewCPI Price pressures remain muted. Consumerprices were up 1.7% y/y in August, led by a 5.0% y/yincrease in the energy sector. Excluding the food and

energy components of the index, prices rose 1.3% y/y,matching the July result. The Bank of Canadas owncore measure of CPI rose 1.6% y/y, which was also thesame as the previous month. On a monthly seasonallyadjusted basis, total CPI edged up 0.1%, while coreCPI was flat. Of the provinces, only Alberta and BritishColumbia experienced monthly price declines, at -0.5%and -0.1%, respectively (non-seasonally adjusted);Saskatchewan led the provinces with a 0.3% m/mincrease. After large HST-induced price increases inthe prior month, a soft inflation report was widelyexpected.International Securities Transactions Canadiansecurities remain popular with international investors.Foreign investment in Canadian stocks, bonds andmoney market instruments continued at a similar pacein July compared with June. Investment in securitiesedged up from $5.4 billion to $5.5 billion, including $5.2billion in Canadian bonds.PreviewIPPI & Raw Materials Price Index, Teranet - NationalBank HPI (09/29)Real GDP (09/30)Neil Tisdall (416) [email protected]

employment gains in the fall as evidenced bypreliminary retail reports indicating a recovery insales in late August and early September


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spending growth will be more moderate than it wasin the first half of the year, as consumers remainrelatively cautious.


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September 24, 2010United StatesGorica Djeric


Housing Remains A Drag On GDP

The housing market remains challenged. Private-sector employmentgains have lacked enthusiasm, household balance sheets are stillconstrained and buyer sentiment remains cautious. Homebuilders areseeing hesitant potential homebuyers, still restrained credit conditions,direct competition from a heavy supply of foreclosed and distressedproperties priced below the cost of construction, and a sizeableshadow inventory of homes yet to hit the market. While recent

housing data may suggest that conditions are stabilizing, riskscontinue to weigh on the downside.

MONTHS' SUPPLY HIGHER THAN The best thing we can say about the

20

00 02 04 06 08 10 12Conventionalmeasures (12.3)market inventories (16.9)REPORTED (# MONTHS)

September homebuilders sentiment

18 Adding potential net

survey is that the unexpected unchanged

16 sellers (19.1)

reading (the market was looking for a one

14 Adding vacant held-off

point gain) still does not put the index

12

back at a record low. The housing market

10

remained challenged, and is expected to

8

remain weak through the remainder of the

year. The overall index remains slightly


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Going forward, tight credit and no material jobgrowth are likely to keep home sales low until suchdrivers begin to show signs of considerably morematerial improvement.


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September 24, 2010MexicoMexicoMexico Developing AmericasOscar Snchez


(CADMXN)08 09 10

Mexican Peso Finally Bests Canadian Dollar Rally

Foreign and local investors are finally recognizing an improvedoutlook for Mexican GDP growth. The sustainability of Mexicoseconomic recovery has been hinging on the capacity of locally

oriented sectors to amplify externally sourced gains.MEX PESO VS. CAD Persistent increases in manufacturing

13

output, as a result of rising export growth

since mid-year 2009, are finally leading to a

pickup in domestic demand on signs of a

more balanced rebound in activity.

Recently published aggregate demand and

12

11

supply figures characterize well the trendsat hand.

10

Domestic demand is finally showing signsof recovering as private consumption

9

increased over 2% q/q during the second

quarter, a significant uplift from the 0.4%

gain in the first. This result is key asconsumer spending represents about 70% of aggregate demand.Investment seems to have turned the corner as well, rising 1% q/q in2010Q2 after a sequence of contractions going back through 2009.

This points to an improved growth outlook as eyed by firms, and isconsistent with a general picture of improving labour marketconditions in the formal sector. Finally, net exports continued to


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contribute to growth, with exports rising more than imports, signallingthat there is more room for domestic demand improvements asimports could pick up further.

On the inflationary front, vast excess capacity still prevails leaving littleroom for price gains. During the first two weeks of August price growthled to a small pickup in annual inflation to 3.65%, remaining safely

within the central banks 3 +/- 1% inflation target. Core inflationclimbed more on the back of accelerating service sector prices, well inline with recently observed payroll gains. In the tradeable goods sector,inflation was subdued, helped in part by Mexican peso gains vis--visthe U.S. dollar. From here on, the outlook is for locally oriented sectorsto continue to observe price pressure, leading to a slow uptrend in

Colombian GDP Re-accelerates In 2010Q2Colombias economy expanded for the fifth consecutivequarter on the back of strong performance in miningand manufacturing. GDP for the second quarterexpanded at a 1% q/q rate, following a 0.8% gain in the

first.This time around output gains were less broadbasedthan in the first quarter as construction and utilitiesslowed. On an annual basis the economy expanded ata 4.5% rate, the fastest pace since 2007.Double-digit growth in the mining sector has beenleading the rest of the economy, with manufacturingnow picking up on the back of improved local spendingand exports. Although the Colombian economy did feelthe effects of the global slowdown as exports to theU.S. contracted, technically it did not go through arecession as GDP fell only in January-March 2009.Inflationary pressures are yet to be felt as the annual

rate of consumer price growth reached only 2.3% inAugust. Although the central banks 2-4% target seemssafe for the time being, a continuous pickup in domesticdemand is bound to lead to price pressures in 2011.headline consumer prices. Monetary policy remainsin stand-by mode, and is expected to continue here atleast through the turn of the year.

Notwithstanding the soft-patch over which the U.S.economy is crossing, Mexicos economic prospectsremain positive on the back of an improved outlookfor domestic demand. Given strong links with U.S.developments felt as well in Canada, the Mexicanpeso/Canadian dollar exchange rate (CADMXN)had recently broken outside of the trading rangewithin which it had remained for most of 2010. TheCADMXN weakened over the 12.5 pesos per C$range in early September, on the back of animproved Canadian outlook so far this year and aslow recovery in Mexico. However, persistentportfolio flows into Mexico pushed it back this weekwithin the 12.10-12.30 range, with the Mexican pesowitnessing finally a rally that surpasses thatobserved in Canada. Consistent with this,international reserves at the Banco de Mexico

reached a record US$106 billion this week.


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September 24, 2010Europe & Asia / OceaniaOscar Snchez


Yen Strengthening Tests Japanese AuthoritiesResolve

Japanese authorities will likely face the need to continue to intervenein the exchange rate market following last weeks foreign exchangeaction. With half the net effect of the intervention having already beenretraced by market activity, the authorities resolve towards avoidingfurther yen strengthening remains on the line.

Despite the initial effectiveness of last weeks exchange rate action, alook into the factors that have contributed recently to JPY strength

leads us to project further upward pressure in the currency in comingweeks, but for USDJPY to settle at 85 by year-end.

Among the circumstances that brought Japanese policymakers tointervene in the foreign exchange market, it is hard to disregard thespeculation that the U.S. Federal Reserve might be consideringadditional monetary policy easing measures (a second stage ofquantitative easing). However, it is also relevant to consider the MoF/BoJs foreign exchange action in the context of the monetary policystance within Japan, given the BoJs own recognition of the need tokeep exceptionally loose monetary conditions due to an evident loss

of momentum in Japanese economic activity during the secondquarter (GDP growth slowed to 1.6% q/q, from 4.8% in the first).

Within the context described above, Japanese bond yield spreads withthe U.S. have remained low, with the 2-year spread reaching 29 bps,down from 100 bps back in April. It seems therefore hard to see howthe MoF could deliver a sustained yen decline with ongoingdownward pressure on yield spreads continuing to prop up thecurrency.

From a historical perspective, although the USDJPY has nowappreciated past its previous July 1995 peak, in real terms (accountingfor inflation differentials) the currency remains well below (30%) thatsummit. Thus, while trading partner price levels have risen by about40% in the past fifteen years, goods prices within Japan have beenvirtually flat. Further on this point, Japanese authorities have beenfairly consistent as previous foreign exchange intervention, back in

Norways Monetary Conditions On HoldDue To Global DevelopmentsNorwegian monetary authorities are in no rush toresume the monetary tightening cycle that has been onhold since June, as market participants expectationsregarding interest rate paths in other countries particularly in the U.S. have been revised lower.

Following Norges Banks Executive Board meeting onSeptember 22nd , the key policy rate was keptunchanged at 2.0%; the rate was raised by 75 bps


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between October 2009 and May 2010. While gradualeconomic recovery continues, inflationary pressuresremain contained with the inflation rate 1.9% y/y inAugust below the central banks 2.5% target. Inaddition, contrary to recent months, the policymakersdo not seem concerned about household debt growthand increases in house prices (both continue to grow

by around 6% y/y). Nevertheless, they maintain theirview that a potential build-up of future financialimbalances stemming from very low interest ratessuggests that gradual normalization of monetaryconditions in the coming months will continue. Theauthorities will set new monetary policy outlines,including a target range for the benchmark interest rate(currently 1-2%), on October 27th . Large interestrate differentials and relatively strong economicfundamentals (we expect the current account surplus tobe equivalent to 15% of GDP in 2010 while the fiscalsurplus will be close to 10% of GDP) will provide

support to the Norwegian krona, taking the currency to5.70 per U.S. dollar by end-2011.Tuuli McCully (416) [email protected], happened at an equivalent real exchange ratelevel. Also worth noting is the role of China as animportant recent buyer of yen-denominated assets.

A final element to consider in analyzing the outlookfor the yen, is its safe-haven status. In this respectthe USDJPY plays a key role as it reflects investorsentiment about the sustainability of the globalrecovery. Therefore, any move that threatens the

viability of the rebound in economic activity islikely to drive up the USDJPY with adverseconsequences to Japans economic vitality. Insummary, we believe that the forces currently atplay will drive the yen to further test the resolve ofJapanese authorities in coming weeks.


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September 24, 2010Industry & CommodityPatricia Mohr


Commodity Prices Rally

After rebounding in July, Scotiabanks Commodity Price Indexposted another gain in August rising 1.6% m/m and willlikely advance further in September. The All Items Index israllying from last springs correction, triggered by the euro zonesovereign debt crisis. While still below last Aprils high-watermark for 2010, the All Items Index is 26.7% above the cyclical lowin April 2009.

SCOTIABANK COMMODITY The Metal & Mineral Index led the All300 PRICE INDEX Items Index higher in August (+4.7%250 m/m). Despite financial market concernover prospects for slower global growth200 in 2010Q3, supply/demand conditions for150copper a bellwether likely remainin deficit (that is, world consumption100 exceeds supply), with LME stockscontinuing to drop through September50 (-30% from February). Investment funds0

00 02 04 06 08 10have re-established long positions incopper and the overall base metalcomplex encouraged by a slight

acceleration in Chinas industrial activity in August (+13.9%),after some slowdown in June and July. Stronger economicindicators in August suggest a soft landing for Chinas economy,with a pick-up in Chinas base metal demand likely by year-end.

China largely drives base metal markets, accounting for almost 40%of world refined copper consumption (39.5%) in 2010 more thanfour times the 8.5% of the United States and almost double the U.S.,Germany and Japan combined (20.5%). The funds remain attracted tothe emerging Asia investment story, searching for return in a nearrecordlow interest rate environment. Traders & merchants have bidup prices, recognizing the actual tightness of copper supplies.

The Agricultural Index posted a modest gain of 0.3% m/m in August.The Canadian Wheat Boards asking export price for wheat climbed18.8% above a year earlier and has advanced further in September (up

(1997=100)Gold Prices Surge To Record HighSpot gold prices reached a new record high of

US$1,300 per ounce in intraday trading on September24, 2010. As of last Friday, gold bullion had alreadyoutperformed U.S. 10-year Treasury bonds (yielding a


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total return of about 11.8% including capital gain andinterest coupon) and the S&P 500 Index (up only 2.2%excluding dividends) since late 2009.Three developments have recently boosted gold prices:1) concern over high government debt and deficitsrelative to GDP in both the United States and manyeuro zone countries, calling into question the integrity

of paper currencies in particular the two reservecurrencies; grid-lock in the U.S. Congress hasprevented addressing the fiscal imbalance; 2)expectations that the Fed may employ morequantitative easing, following the Feds September 21statement that it is prepared to provide additionalliquidity, if needed, to revive a lacklustre economy andto stoke uncomfortably low inflation; and 3) generaleconomic & financial market uncertainty. Gold pricescould soon test the US$1,350 mark.35% y/y). Russia the worlds third-largest wheatexporter last year extended its export ban on

wheat and feedgrains until November 2011 in viewof a severe drought across the FSU-12. Barley pricesin Western Canada have also increased in recentmonths.

In contrast, the Oil & Gas Index edged down inAugust by 0.2% m/m, as lower Canadian natural gasexport prices and softer heavy crude oil prices atHardisty, Alberta just offset stronger Edmonton lightcrude oil and firmer LPG prices. The ForestProducts Index also inched down by 0.7% m/m.While Western Spruce-Pine-Fir 2x4 lumber pricesrebounded back over average mill cash costs in the

B.C. Interior and U.S. linerboard producersimplemented a US$40 price hike to US$680 pertonne, NBSK pulp prices fell back to US $900 fromrecent record highs, as Chilean pulp production (cutby the recent earthquake) came back on line. OSBprices also faltered alongside weak U.S. housingstarts (only 598,000 units annualized in August, upslightly from 541,000 in July).


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September 24, 2010Market MetricsNeil Tisdall Mary Webb

(416) 866-6252 (416) [email protected] [email protected]

EURO

CANADIAN DOLLAR 1.65

1.10 (EURUSD)

(CADUSD)

1.601.05

1.55

1.50

1.00

1.45

0.95

1.40

0.90

1.35

1.30

0.85

1.25

0.80

1.20

0.75

1.159/26/08 9/25/09 9/24/10 9/26/08 9/25/09 9/24/10CANADIAN INTEREST U.S. INTEREST RATES

6.0

RATES 6.010-YEART-BOND


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-900

CHANGEFY00 02 04 06 08 10

OTHER GOODS-PROD.

-2 2 6 101418

SOURCE: NOVA SCOTIA FINANCE.

SOURCE: L'INSTITUT DE LA

STATISTIQUE DU QUBEC.

Markets The FOMC unsurprisingly left the overnightrate at the 00.25% range on Tuesday, where it hasbeen since December 2008. The tone of theaccompanying statement was that the economicrecovery isnt strong enough yet to warrant a rate hike,

and that the Committee would like inflation to be at ahigher level. The vote to keep the rate at emergencylevels was passed 8-1, with the lone dissenter beingThomas Hoenig from Kansas City. Hoenig believes thatthe continuation of extremely low rates will underminelong-term growth and that the pace of the economicrecovery is swift enough to handle higher overnightrates. Hoenig has been the lone dissenting voice of theFOMC for the past six sessions. The dovish sentimentfrom the FOMC helped spot gold prices set new recordhighs this week, topping US$1,300/oz for the first timeever.After a relatively lacklustre performance over most of

the week, the S&P 500 had a strong Friday morning,gaining almost 2% on positive capital goods ordersdata. The TSX was somewhat insulated from thegoods orders news in the U.S., but has still increased0.6% at the time of writing.Fiscal Policy Following British Columbianarrowing its projected deficit for fiscal 2010-11 (FY11)last week to $1.38 billion (0.7% of provincial GDP),Nova Scotia this week trimmed its forecast FY11shortfall by $19 million to $203 million (0.6% ofprovincial GDP). Nova Scotias restated FY10 deficit is$330 million (1.0% of provincial GDP), wider than the$242 million shortfall previously reported but stillsignificantly narrower than the governments $488million estimate in April. For FY11, N.S. now expectsslightly softer revenues, but the downward revision toexpenditures is somewhat larger, driven by saving onthe debt service.Quebec estimates a $1.26 billion shortfall for its firstquarter of FY11, improving upon the $1.61 billion deficita year earlier. Program spending for Q1 is just 2.0%ahead of a year ago while total revenues are 6.1%higher, propelled by a 7.5% jump in Quebecs ownsourcereceipts. Mirroring the national pace, Quebecestimates slower real GDP growth of 2.0% (q/q

annualized) for Q2 2010, but the gain in provincial GDPthat began in Q3 2009 more than compensates forQuebecs short and relatively moderate downturn.


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Note: Latest observation taken at time of writing.


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September 24, 2010Economic TablesCanada 2009 10Q1 10Q2 Latest United States 2009 10Q1 10Q2 LatestReal GDP (annual rates) -2.5 5.8 2.0 Real GDP (annual rates) -2.6 3.7 1.6

Current Acc. Bal. (C$B, ar) -43.5 -33.8 -44.1 Current Acc. Bal. (US$B, ar) -378-437 -493Merch. Trade Bal. (C$B, ar) -4.6 4.5 -9.0 -32.8 (Jul) Merch. Trade Bal. (US$B, ar) -507 -605 -678 -663 (Jul)Industrial Production -10.0 -0.3 6.3 8.1 (Jun) Industrial Production -9.3 2.7 7.6 6.3 (Aug)Housing Starts (000s) 149 198 198 183 (Aug) Housing Starts (millions) 0.55 0.620.60 0.60 (Aug)Employment -1.6 0.5 1.8 2.1 (Aug) Employment -4.3 -2.4 -0.5 0.2 (Aug)Unemployment Rate (%) 8.3 8.2 8.0 8.1 (Aug) Unemployment Rate (%) 9.3 9.7 9.7 9.6 (Aug)Retail Sales -2.9 7.3 4.9 3.3 (Jul) Retail Sales -7.1 6.3 7.5 3.7 (Aug)

Auto Sales (000s) 1459 1555 1519 1520 (Jun) Auto Sales (millions) 10.4 11.0 11.311.4 (Aug)CPI 0.3 1.6 1.4 1.7 (Aug) CPI -0.4 2.4 1.8 1.1 (Aug)IPPI -3.4 -0.5 0.5 1.0 (Jul) PPI -2.6 4.8 4.5 3.1 (Aug)Pre-tax Corp. Profits -32.3 16.8 27.5 Pre-tax Corp. Profits -1.2 56.9 48.8Mexico BrazilReal GDP -6.5 4.3 7.6 Real GDP -0.1 8.0 8.2Current Acc. Bal. (US$B, ar) -5.7 -2.0 -2.9 Current Acc. Bal. (US$B, ar) -24.3 -48.2 -46.9Merch. Trade Bal. (US$B, ar) -4.6 1.5 -0.2 -8.4 (Aug) Merch. Trade Bal. (US$B, ar) 25.3 3.6 28.0 29.3 (Aug)Industrial Production -7.3 5.4 7.8 5.4 (Jul) Industrial Production -7.2 17.3 14.2 9.8 (Jul)

CPI 5.3 4.8 4.0 3.7 (Aug) CPI 5.2 3.9 5.5 4.9 (Aug)Argentina ItalyReal GDP 0.9 6.8 11.8 Real GDP -5.1 0.5 1.3Current Acc. Bal. (US$B, ar) 11.3 -1.3 12.4 Current Acc. Bal. (US$B, ar) -0.07 -0.10 -0.07 0.01 (Jul)Merch. Trade Bal. (US$B, ar) 16.9 8.5 21.4 12.6 (Aug) Merch. Trade Bal. (US$B, ar) -6.9 -46.9 -29.2 26.8 (Jul)Industrial Production 0.1 9.0 10.1 7.6 (Jul) Industrial Production -18.3 3.1 7.64.6 (Jul)CPI -26.9 35.7 93.3 11.1 (Aug) CPI 0.8 1.4 1.5 1.6 (Aug)Germany FranceReal GDP -4.7 2.0 3.7 Real GDP -2.8 1.4 2.0Current Acc. Bal. (US$B, ar) 165.5 173.9 132.0 137.7 (Jul) Current Acc. Bal. (US$B, ar) -52.2 -22.2 -72.9 7.9 (Jul)Merch. Trade Bal. (US$B, ar) 189.8 191.4 184.4 194.5 (Jul) Merch. Trade Bal. (US$B, ar) -31.1 -33.0 -40.6 -39.3 (Jul)Industrial Production -15.5 6.0 12.4 11.3 (Jul) Industrial Production -13.3 5.77.0 5.5 (Jul)Unemployment Rate (%) 8.2 8.1 7.7 7.6 (Aug) Unemployment Rate (%) 9.4 9.9 9.9 10.0 (Jul)CPI 0.3 0.8 1.1 1.0 (Aug) CPI 0.1 1.3 1.6 1.4 (Aug)Euro Zone United KingdomReal GDP -4.0 0.8 1.9 Real GDP -4.9 -0.2 1.7Current Acc. Bal. (US$B, ar) -77.7 -141 -120 56 (Jul) Current Acc. Bal. (US$B, ar) -23.7 -72.1

Merch. Trade Bal. (US$B, ar) 56.6 15.3 45.1 123.3 (Jul) Merch. Trade Bal. (US$B,ar) -128.7 -137.3 -138.0 -159.1 (Jul)Industrial Production -14.9 4.7 9.1 7.3 (Jul) Industrial Production -10.1 0.3 1.


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September 24, 2010Financial TablesInterest Rates (%, end of period)Canada 10Q1 10Q2 Sep/17 Sep/24* United States 10Q1 10Q2 Sep/17 Sep/24*

BoC Overnight Rate 0.25 0.50 1.00 1.00 Fed Funds Target Rate 0.25 0.25 0.25 0.253-mo. T-bill 0.30 0.61 1.03 0.98 3-mo. T-bill 0.15 0.17 0.15 0.1510-yr Govt Bond 3.57 3.08 2.93 2.86 10-yr Govt Bond 3.83 2.93 2.74 2.6030-yr Govt Bond 4.07 3.65 3.51 3.43 30-yr Govt Bond 4.71 3.89 3.90 3.79Prime 2.25 2.50 3.00 3.00 Prime 3.25 3.25 3.25 3.25FX Reserves (US$B) 56.5 55.3 57.2 (Jul) FX Reserves (US$B) 116.5 113.5 118.1 (Jul)Germany France3-mo. Interbank 0.49 0.67 0.85 0.85 3-mo. T-bill 0.31 0.30 0.35 0.3710-yr Govt Bond 3.09 2.58 2.43 2.35 10-yr Govt Bond 3.42 3.05 2.78 2.71FX Reserves (US$B) 60.2 61.2 62.0 (Jul) FX Reserves (US$B) 48.1 45.6 47.8 (Jul)

Euro-Zone United KingdomRefinancing Rate 1.00 1.00 1.00 1.00 Repo Rate 0.50 0.50 0.50 0.50Overnight Rate 0.40 0.54 0.46 0.44 3-mo. T-bill 4.85 4.85 4.85 4.85FX Reserves (US$B) 284.9 283.8 292.1 (Jul) 10-yr Govt Bond 3.94 3.36 3.13 3.05FX Reserves (US$B) 57.6 61.2 63.3 (Jul)Japan AustraliaDiscount Rate 0.30 0.30 0.30 0.30 Cash Rate 4.00 4.50 4.50 4.503-mo. Libor 0.18 0.18 0.17 0.16 10-yr Govt Bond 5.78 5.09 5.12 5.0510-yr Govt Bond 1.40 1.09 1.05 1.01 FX Reserves (US$B) 34.9 34.1 39.7 (Jul)FX Reserves (US$B) 1015.3 1019.6 1019.6 (Jun)Exchange Rates (end of period)USDCAD 1.02 1.06 1.03 1.03 /US$ 93.47 88.43 85.86 84.26CADUSD 0.98 0.94 0.97 0.97 US/Australian$ 91.72 84.08 93.63 95.78

GBPUSD 1.518 1.495 1.563 1.583 Chinese Yuan/US$ 6.83 6.78 6.73 6.69EURUSD 1.351 1.224 1.305 1.348 South Korean Won/US$ 1131 1222 1161 1155JPYEUR 0.79 0.92 0.89 0.88 Mexican Peso/US$ 12.365 12.941 12.799 12.540USDCHF 1.05 1.08 1.01 0.98 Brazilian Real/US$ 1.781 1.805 1.721 1.713Equity Markets (index, end of period)United States (DJIA) 10857 9774 10608 10838 U.K. (FT100) 5680 4917 5508 5602United States (S&P500) 1169 1031 1126 1146 Germany (Dax) 6154 5966 6210 6292Canada (S&P/TSX) 12038 11294 12165 12168 France (CAC40) 3974 3443 3722 3777Mexico (Bolsa) 33266 31157 33047 33329 Japan (Nikkei) 11090 9383 9517 9472Brazil (Bovespa) 70372 60936 67089 69079 Hong Kong (Hang Seng) 21239 20129 2169122119Italy (BCI) 1138 972 1037 1021 South Korea (Composite) 1693 1698 1815 1847Commodity Prices (end of period)Pulp (US$/tonne) 910 1020 990 990 Copper (US$/lb) 3.55 2.96 3.45 3.59Newsprint (US$/tonne) 565 618 637 637 Zinc (US$/lb) 1.07 0.78 0.97 1.01Lumber (US$/mfbm) 280 188 233 236 Gold (US$/oz) 1115.50 1244.00 1274.00 1297.00WTI Oil (US$/bbl) 83.76 75.63 73.66 76.32 Silver (US$/oz) 17.50 18.74 20.76 21.35Natural Gas (US$/mmbtu) 3.87 4.62 4.02 3.89 CRB (index) 273.34 258.52 278.69 282.60* Note: Latest observation taken at time of writing.


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