Canadian economy grows at sharpest rate for close to six years

After mixed energy markets and uncertainty overseas, markets had marked down the prospects of a bumper quarter of growth north of the border. But, they’ve been proved wrong; annual GDP growth leapt to 4.5% year-on-year in Q2, well ahead of expectations and shows an economy expanding at the fastest pace since Q3 2011. The loonie’s rallying in response, gaining close to 1% against the greenback at the time of writing.

Despite a weaker housing and investment picture, household spending (almost imitating the US release we saw yesterday…) came in very positive, with a exports also contributing strongly. The data could put the Bank of Canada’s governing board under a bit of pressure as they’d seen a mere 3% of growth over this period – limiting the room they have to keep rates (and the Canadian dollar) low.

Mixed US numbers will be brushed aside for tomorrow’s payrolls

Jobless claims, personal consumption expenditure and income/spending numbers came and went with relatively little fanfare this morning. Their proximity to tomorrow’s nonfarm payrolls number could limit their impact for the rest of today’s session. While Wednesday’s ADP employment change was very strong, tomorrow morning’s figures aren’t expected to keep up and are seen staying below +200,000 for August, which is historically a weak month for job gains. This certainly doesn’t signal an issue in the labor market, but the impact of Harvey could also crimp September’s job prospects and put Trump even further behind in his campaign promise of 25 million jobs by the end of his term.

Expectations of a hike at the meeting on December 13th are currently running at 33% – the lowest level for 2 weeks – which reflects the prolonged weakness in the dollar over the past few months, the expected disruption of hurricane Harvey and the less upbeat business outlook that’s seen extending into the close of 2017. Unless wages grow at an incredibly fast pace in tomorrow’s numbers, we don’t expect that to change.

Brexit presser sounds like a broken record

Another EU/UK press conference, another null and void statement from the lead negotiators David Davis and Michel Barnier. At the previous round of talks, both teams said no decisive progress had been made on the main points up for discussion. This time around, the story remains the same and if there’s no progress over the next few months, the far more important talks on trade will fail to begin and leave the UK in the lurch. Sterling’s pretty much unmoved as it’s hardly surprising that neither side are willing to budge an inch, let alone a few billion euros.

Chicago PMI and pending home sales numbers cross the wires this morning, but markets should remain stoic ahead of tomorrow’s labor market report.