Trade Desk Thoughts: Canada's trade balance went into a deficit in December for the first time since March 1976, Statistics Cananda said today. Exports and imports both fell as the global economy cooled, with exports falling at a faster pace.
Exports dropped 9.7% to $35.3 billion, as both prices and volumes declined. This marked the largest month-over-month percentage decrease since October 1982. The declines were widespread across most sectors. Overall, exports have been trending downwards since July 2008.
Imports fell 5.7% to $35.8 billion. The decrease, reflecting mostly volume reductions, was largely attributable to machinery and equipment, automotive products, and industrial goods and materials.
Exports to the United States dropped 10.0% to $25.9 billion. The slump in exports, led by crude petroleum, outpaced an 8.4% fall in imports. As a result, Canada's trade balance with the United States fell from $4.6 billion in November to $3.8 billion in December, its lowest level since December 1998.
Forex Technical Reaction: After falling sharply on Tuesday, crude oil was recently trading up 78 cents (2.05%). The cad, which normally declines as crude rises, was moving higher for a second day.