Canadian goods trade deficit narrows more than expected in June

Canadian goods trade deficit narrowed more than expected in June to CAD 626 million from a slightly revised CAD 2.7 billion in May. Exports rose widely by 4.1 percent to CAD 50.7 billion, driven higher by energy products, aircraft and other transportation equipment and parts. On the contrary, imports dropped a bit by 0.2 percent to CAD 51.3 billion, thanks to large declines in energy imports and in aircraft and other transportation equipment and parts.

In real or volume terms, exports rose 2.1 percent while imports contracted 1.3 percent in June. For the second quarter, export volumes rose 3.8 percent while import volumes rose 1.7 percent. Energy exports rose 7.1 percent to CAD 9.9 trillion in June, the highest level since October 2014. This was driven by crude oil exports largely on the strength of prices.

The fall in imports was mainly because of temporary factors unwinding. Imports of energy products in June declined dramatically as a resumption of operations for several Canadian refineries that had temporarily shut down in April and May, and thus reduced the need for imported fuels.

Canada’s merchandise trade surplus with the U.S. broadened to CAD 4.1 billion in June from CAD 3.3 billion in May, thanks to a 2.5 percent rise in exports surpassing a 0.3 percent rise in imports.

Today’s report wraps up a strong quarter for Canada’s trade, noted TD Economics in a research report. Following a flat start to the year, goods exports are set to add solidly to the GDP growth in the second quarter, which is tracking modestly above 3 percent.

“As such, trade policy uncertainty is likely to continue to dampen the domestic and global outlook for business investment, particularly as the U.S. continues to threaten to escalate tariffs on Chinese goods, many of which are critical to the global supply chain”, stated TD Economics.

At 15:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was slightly bullish at 52.2131, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -24.1494. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex