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According to analysts at Royal Bank of Canada, ongoing trade concerns should continue to take the shine off of what otherwise has looked like relatively solid economic data.

Key Quotes

“The end-of-month Q2 GDP report should confirm the economy performed reasonably well in the second quarter. Data to-date supports our forecast that GDP growth rebounded in Q2. We are looking for a 3% gain, a marked improvement following subpar growth of less than half a percent in each of the two prior quarters.”

“A big chunk of the rebound in Q2 came from the oil & gas sector as earlier stresses (low global oil price benchmarks, wide Canadian price spreads, and mandated Alberta production cuts) eased. Activity outside of oil & gas production also picked up.”

“Residential investment probably increased for the first time in six quarters with housing markets finding a near-term bottom in the spring. But business investment will still be a soft spot in Q2 with trade uncertainty dampening sentiment. And a big export-led surge in the often-volatile net trade balance will bump up the growth rate in the quarter but clearly looks unlikely to be repeated given rising global trade tensions.”