CAD Trade Balance Actual 0.1B, Expected -1.3B, Previous -1.0B
Release Explanation: A country’s exports minus its imports; the largest component of a country’s balance of payments. An increase or decrease in the Trade Balance will help determine the future economic outlook and growth numbers in a region. It can impact all aspects of an economy as it is the way that region balances its books.
“This is a stand-alone valuation of the reliance, or not, of imported Goods compared to what is being sent abroad”, the LFB Trade Team said. “A currency will be greatly impacted by this report as the costs of buying Imports, or selling Exports, is reliant upon a currency’s valuation to a degree”. A country that Exports more than it Imports (China for example) will benefit from a weaker currency; its Exports are cheaper for foreigners to buy, and vice verse.
Trade Desk Thoughts: Merchandise exports and imports both advanced in February following three months of rapid declines. Exports rose 5.2% to $33.1 billion as all sectors increased and auto makers resumed production. Meanwhile, imports increased 1.1% to $33.0 billion led by machinery and equipment. This resulted in a small trade surplus of $126 million, up from a deficit of $1.2 billion in January.
After leading the decline in January, exports of machinery and equipment and automotive products accounted for almost three-quarters of the gain in exports in February. The increase in total exports was due to a 7.0% increase in volume while prices declined 1.7%. The February gain in imports was primarily supported by machinery and equipment and automotive products, while weaknesses in energy products dampened the growth. Overall, both price (+0.9%) and volume (+0.2%) increased.
Forex Technical Reaction: The loonie looks to be heading towards 1.2200 after strengthening in response to economic reports this morning. Oil prices are rising as the dollar has started to weaken. Since the start of the trading day the cad has declined more than 100 pips and is now firmly below the 100 day simple moving average.