O Canada is Growing Again

Canada reported its monthly Gross domestic product estimate for September, and at the same time, provided its first estimate of Q3 GDP.   The truly amazing Graphic, created on Bloomberg, exhibits both time series.

The yellow line depicts the monthly GDP and the quarterly estimation is the white line.  Obviously, they track each other, as one would expected.  The good news is that after contracting in the first two quarters of the year, the Canadian economic climate expanded by 2.3% within Q3.

The bad news is that the growth was front-loaded, and as the quarter progressed, it lost much of its impetus.  The 0.5% contraction within September was the largest monthly decline since early ’09. 

The monthly GDP fell for that first five months of the season.  It bounced back in 06, expanding by 0.4% and largely maintained its mojo in July by growing 0.3%.  However, the economy slowed down to 0.1% in August before the September decline.  There isn’t any positive momentum at the start of Q4.

Since July, interest rate expectations in Canada, as reflected by the June 16 BA futures have generally faded. After cutting rates twice in the first part of the year, the Bank of North america signaled that the mini-easing cycle was more than.

The lower graph here exhibits the June 16 BA commodity.  They are flirting with the downtrend collection, which comes in near 99.20 today.  It is not reasonable to expect the Bank of Canada to cut rates at tomorrow's meeting.  However, a dovish declaration could fan rate cut expectations, which would lift the actual BA futures and weigh around the Canadian dollar.  Friday's work report for the US as well as Canada will likely underscore the actual divergence between the two economies.

Great Graphic: Canada Growth and Rate Anticipations is republished with permission through Marc to Market