Canadian First Quarter Trade Account Strongest In A Year And A Half
Canadian First Quarter Trade Account Strongest In A Year And A Half
Canadian Current Account Balance (1Q)
Actual: C$5.6B
Expected: C$2.9B
Previous: C$0.8B (R+)
Canada’s current account balance nearly doubled forecasts for a recovery in trade activity through the first quarter due in large part to rising commodity prices and a strong currency. Heading into the report, the official consensus for the broad trade gauge was projecting a C$2.9 billion positive balance after an initially reported C$0.5 billion deficit in fourth quarter of 2007 - the first shortfal in nearly a decade. What the market receieved instead was a C$5.6 billion surplus that was not only a strong rebound from the previous reading but also the largest positive gap for the series since the third quarter of 2006. Even more encouraging for the health of trade was the fact that the fourth quarter’s balance was revised from its previously stated deficit to a positive C$0.8 billion surplus. The favorable trade winds will certainly help the Canadian economy weather the US economy slowdown; but the components of the improvement reveal an uncertainty surrounding the stabality of trade activity. Looking into the details of the broad trade report, it is clear that volatile commodities are floating responsible for the bulk of the positive reading. The balance of goods jumped to C$13.37 billion through the first quarter from C$9.16 billion in the previous period. At the same time, services held below water with a C$5.52 billion deficit that was handicapped travel, transportation and commercial services. Investment was similarly stunted with a $1.98 billion deficit. With the Canadian currency holding close to record highs, if either the demand or price for commodities slips in the coming months or quarters, the country’s trade activity could very well suffer.
DailyFX
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