Published: Thu, March 08, 2018
Research | By Derrick Holloway

Trade Deficit Rose by $2.7 Billion in January

Trade Deficit Rose by $2.7 Billion in January

Trade deficit of Canada narrowed in the month of January. The deficit came in better than the market consensus for a C$2.5 billion shortfall, according to economists at Royal Bank of Canada.

"However, import prices were down in nine of 11 commodity sections, while export prices fell in every commodity section except energy products", says StatsCan.

After spiking to an all-time high in December, imports fell by 4.3 per cent to $47.7 billion. Moreover, the import of logging, mining, and construction machinery and equipment dropped 40 percent. Export data can give an important reflection of Canadian growth as tangible goods like oil, gold and manufacturing dominate a large part of Canada 's GDP.

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Canada's merchandise trade deficit in January narrowed from the previous month to a seasonally adjusted 1.91 billion Canadian dollars ($1.47 billion), Statistics Canada said Wednesday. "Excluding the price of energy products, which rose sharply in January, the prices of both imports (-1.1%) and exports (-1.8%) fell".

Stronger demand from the USA and a sub-80 United States cent loonie should provide some support for Canadian exports.

Trade between Canada and the United States has become a bugaboo for the current USA administration, with President Donald Trump railing about Canada's trade surplus with the United States.

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The "soft recent trend in exports, and the greater uncertainty for the future resulting from USA tariffs" give reason for the Bank of Canada to "sound less enthused on the outlook" at its rate decision this morning, Grantham says.

At 18:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was slightly bearish at -60.2424, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -43.431.

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