With no significant data releases on either sides of the border today, markets will be left to sort out the conflicting signals that have been trickling out of the U.S. economy says economist Allan Seychuk at RBC Financial Group.

“Industry data strongly suggests that the rise in industrial production seen so far this year will persist into the second half of this year. Orders are up which will sustain industrial activity and an eventual resurgence in hiring as the year unfolds,” Seychuk notes. However, the outlook for consumers is less certain. “Confidence measures have dropped in late summer due to volatile equity markets casting some doubt on the sustainability of consumer spending. We believe that the dip in confidence will prove temporary.”

Seychuk says that a look at leading indicators of economic activity suggests that U.S. economic growth will bounce back to the 3 % range in the second half of this year. “Those looking for an ease in interest rates by the Fed stand to be disappointed,” he says.

In Canada, RBC is looking toward the second quarter GDP numbers to be released on Friday. It predicts that they should show healthy growth in the 5% range. “The details of the report, especially in consumer spending, are likely to point to slightly slower growth in the third quarter however it will remain above 3.0%. The implications are clear: more Bank of Canada rate hikes are coming. We expect the overnight rate to finish the year at 3.5%, 75 basis points higher than today,” Seychuk concludes.