October 05, 2022 13:16 GMT
[small correction to line on reliance on energy revenues]
- The merchandise trade surplus was notably smaller than expected in Aug at C$1.5B (cons 3.5B) after a downward revised 2.4B in July (initially 4.1B), from both energy and non-energy items.
- Add in a growing service deficit (largest nominal since Mar’20 on re-opening) and the goods & service trade balance fell into a small deficit for the first time since Dec’21.
- The three-month rolling surplus narrowed to 0.9% GDP from 1.8% GDP (initially 2.4% GDP), which remains elevated vs the pre-pandemic average deficit of ~3.5% GDP but with non-energy trade deficits already at historical highs and energy products doing the heavy lifting, prone to a pullback in energy revenues.
- USDCAD saw only limited reaction on the data with strong building permits providing an offset, but the continued widening in non-energy deficits in particular could increasingly weigh on CAD, which in trade-weighted terms remains above pre-pandemic levels in contrast to its sharp decline vs the USD.