Canada Posts Larger Trade Surplus Than Expected

CAD Trade Balance 1.1B, Expected 0.5B, Previous 0.1B

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 standalone valuation of the reliance, or not, of imported Goods compared to what is being sent abroad. 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: Canada's trade balance came in at 1.1B, a higher surplus than expected, Statistics Canada said today. Exports and imports both fell largely due to volume reductions. Imports declined more than twice as much as exports.

Exports dropped 1.8% to $32.5 billion, largely reflecting a decline in exports to the U.S.. Increased exports to Europe moderated the decline.

Imports fell 4.4% to $31.4 billion as most sectors posted declines. Energy products posted the largest decline, followed by machinery and equipment as well as industrial goods and materials.

Forex Technical Reaction: The cad dropped immediately after the release as the U.S. trade deficit posted a larger deficit than expected. The pair has lost 120 pips since the start of the Asian session and looks set to erase all of yesterday's gains.

Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com

TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.

The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC.