THREE CHARTS TO START YOUR WEEK

CURRENCIES

The U.S. dollar is up 8.3 per cent against the euro since early December and it "has more room to run," say currency strategists with CIBC World Markets Inc..

The greenback is gaining ground as a result of stronger economic data, while at the same time the euro is being challenged by debt-burdened governments such as Portugal, Ireland, Greece and Spain.

"The resurgence in [U.S.] demand is being helped by restocking and the economy is set to continue to benefit from inventory refills over the first half of 2010," according to Avery Shenfeld, chief economist, and Krishen Rangasamy, an economist with CIBC World Markets.

The strength in the greenback is reflecting a rise in risk aversion as investors worry about slowing global growth stemming from China's interest rate policies and the euro zone debt problems, said Camilla Sutton, a currency strategist with Scotia Capital Inc. "The ultimate currency market implication is that U.S. dollar support is still in effect as the dollar index has pushed to its highest level [intraday] since August," she said.

BONDS

Sovereign risk worries are bringing attention to countries such as Canada with good economic fundamentals, said Mark Chandler, a fixed-income strategist with RBC Dominion Securities Inc. The 3.34-per-cent yield on 10-year Canadian government bonds is currently about 30 basis points less than on U.S. Treasuries.

The lower cost of government borrowing gives Canadians some payback after a decade of belt-tightening, he said. In the past, bouts of periodic bond purchases by foreigners have come when Canadian yields were well in excess of the their U.S. counterparts, but now there is inflow even with lower rates.

"Indeed, the lack of a yield pickup over U.S. bonds during much of the past decade may well explain why the proportion of Canadian government bonds held by foreigners - at slightly less than 15 per cent - is one of the lowest across major markets," he said.

The appreciation of the Canadian dollar has allowed domestic bonds to outperform U.S. Treasuries by 2.7 per cent a year during the past decade.

That scenario is attracting central bank buyers - most recently the Central Bank of Russia.

STOCKS

If there is one indicator investors need to keep an eye on to assess the reality of the U.S. recovery it will be the jobs data, said Sal Guatieri, a senior economist with BMO Nesbitt Burns Inc.

This Friday, the U.S. non-farm payrolls is scheduled for release, and economists are forecasting that 13,000 jobs were created during January. The unemployment rate is expected to remain at 10 per cent.

It will take about 120,000 new jobs a month to reduce the unemployment rate because of a rising population and a rising participation rate as people return to the work force, Mr. Guatieri said. "We are still holding to the view of a jobless recovery," he said. By the end of this year, BMO Nesbitt Burns estimates the unemployment rate will decline to 9.8 per cent and by the end of 2011 to about 8 per cent. The outlook is premised on a slow recovery.

To have a more significant impact on unemployment, the economy will need to generate 200,000 to 300,000 jobs a month.

"It may take three to four years, possibly longer, to get back to full employment," he said. Full employment is considered to be about a 5-per-cent unemployment rate.