CAD: Trade deficit expected to widen - TDS

David Tulk, Head of Global Macro Strategy at TDS, suggests that the Canada's trade deficit is expected to widen in February to $1.0 billion as a pullback in exports is expected to outpace a weaker month for imports.

Key Quotes

“A forecasted 1.8% drop in exports reflects the combination of fatigue in auto production (consistent with softer US data), stable commodity prices, as well as a retrenchment in several sectors that showed outsized gains in prior months (consumer goods).

Imports are expected to decline by a more benign 0.8% as a generally soft backdrop for domestic demand is adversely impacted by a weaker currency. Lower prices are expected to play a role in the wider deficit, and when controlled for, export and import volumes are expected to be firmer. This will allow February to build on the momentum created in January and ensure Q1 growth features a robust positive contribution from net exports.”