Canada’s goods trade deficit narrows more than expectations in July

Canadian goods trade deficit narrowed more than anticipated in July. Deficit reached CAD 114 million, as compared with expectations of a widening to CAD1 billion, down from a revised CAD 743 million in June. Both exports and imports added to the narrowing of the deficit. Exports rose 0.8 percent to CAD 51.3 billion, while imports dropped 0.4 percent to CAD 51.4 billion. Exports were driven by price effects in energy products, while declines in imports were due to lower aircraft demand.

After accounting for price changes, the picture is not that rose, noted TD Economics. In terms of volume, exports fell 0.8 percent, whereas imports dropped 1.1 percent. Increases in exports were mainly driven by energy products that rose 5 percent to CAD 10.3 billion, their highest nominal level since the late 2014 oil price shock. Performance throughout other categories came in mixed, with declines in over half of the 11 broad product groups. Other notable rises were seen in motor vehicles and parts.

These rises were partly countered by declines in aircraft exports, which fell 9.1 percent. The decline in imports was led by aircraft and metal ores and non-metallic minerals imports. There were partly countered by rises in energy imports.

The merchandise trade surplus with the U.S. widened again in July, reaching USD 5.35 billion, the highest level since October 2008. Canadian trade surplus with nations other than the U.S. widened to CAD 5.5 billion in July, owing to falls in imports.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bearish at -125.852, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 56.3686. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex