Canada’s deficit position falls to the lowest level since 2008

Daily Currency Update

CAD - Canadian DollarThe USD/CAD pair is decreasing 0.1 percent (slightly stronger Loonie) towards 1.3292 (0.7523) this morning, following the release of Canada's balance of international payments in the second quarter, which narrowed by $10.2 billion to $6.4 billion. This is the lowest level since Canada returned to a deficit position at the end of 2008. The reduction mainly reflected a much smaller deficit on goods. According to Statistics Canada, the deficit on trade in products and services narrowed by $9.3 billion to $5.5 billion in the second quarter. Exports were up by $8.0 billion, led by higher sales of energy products. Imports were down by $1.3 billion, mainly on lower imports of aircraft and other transportation equipment and parts. Since 2009, Canada has recorded a current account deficit every year with services posting the most significant accumulated deficit, followed by investment income and goods. Other important pairs were losing against the Loonie this morning such as the EUR/CAD, GBP/CAD, NZD/CAD. They were falling 0.21, 0.18, and 0.15 percent respectively, given the weaker than expected economic data in those economies. Regarding the U.S. - China trade war, it seems like the trade talks have kept the FX market on edge this week and it looks like it is going to stay this way for a while. According to Bloomberg, the White House says that it does not to expect a deal anytime soon, and China says it could retaliate on the planned tariff hike by U.S. President Donald Trump – though it prefers not to. Chinese Commerce Ministry spokesman Gao Feng said, "China has ample means for retaliation, but thinks the question that should be discussed now is about removing the new tariffs to prevent escalation.”