A rebound in oil prices has helped lift Canada’s export figures but hasn’t helped the overall trade balance as much as economists had predicted, according to official trade balance data yesterday.

Canada’s trade deficit narrowed to $4.2bn in January, as exports rose faster than imports. Export prices were up 2%, with export volumes increases of 0.9% and energy exports rising 14.0% in January to $7.1bn.

Trade Deficit Narrows, but misses predictions

The less than expected trade data pushed Canada’s 10-year yield even further down, falling another 3 basis points below the 3-month yields – this created an inverted curve on the yield graph and is seen by some investors as a leading indicator of recession.

Generally speaking, the Canadian dollar has been suffering of late, with growing concerns over the Canadian economy, largely influenced by growing concerns over the global economy. As the Canadian economy is a commodity driven economy, as commodity prices fall, economic output within these economies normally slows. This is a prime example of what is being seen in both Canada and Australia for example.

Canadian Gross Domestic Product figures tomorrow

Tomorrow’s Gross Domestic Product (GDP) figures will be keenly watched by investors. At present the current predictions could condemn the Loonie's poor run of form at the minute, with analysts expecting Canadian GDP to drop into negative territory and spark further fears that the Canadian Economy could be heading for a recession. The Canadian dollar could weaken if these figures come out as expected and which may even spark a long-term trend for Canadian dollar

Brexit developments could also be key for any clients with an upcoming GBPCAD requirement, read the GBP section for full coverage on events and how this could affect trades.

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