Canada reported a trade deficit of 2.53 billion dollars, more than double the expectations for 1.2 billion. This isn’t good news.
USD/CAD, which was already looking for a new direction, jumped higher and crossed 1.3130. Are more gains in store or is it just a correction on the way down?
Canada’s exports were down to 43.95 billion from 45.59 beforehand. Imports were basically unchanged: 46.49 billion from 46.41. The deficit isn’t good on its own and the fact it reflects less trade adds insult to injury.
In the US, the deficit came out at $48.33 billion, close to $47.4 billion predicted. So, the fall of the loonie is clearly related to Canada.
More: Weak CAD not a panacea for Canada; – CIBC
Dollar/CAD reached a low of 1.3064 earlier, maintaining a big distance with the 1.30 level that it almost touched after the Fed decision. On the other end, we have 1.3460, which was the 11 year high for the pair. On the way, resistance awaits at 1.3170, 1.3220 and 1.33.
On Friday, Canada releases employment figures, and this is expected to have the most significant impact on the loonie. Yet beforehand, we have the Ivey PMI today and building permits tomorrow.
Here is how it looks on the chart:
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