Canadian trade balance improves in July driven by non-energy sector

Canada's trade deficit narrowed more than expected in July, fresh data showed on Friday. According to Statistics Canada's report, the country's trade gap dropped to C$2.5 billion ($1.9 billion) in the seventh month of the year, compared to June's upwardly revised reading of C$4.0 billion ($3.1 billion). Meanwhile, market analysts expected Canada's trade deficit to narrow to C$3.2 billion ($2.5 billion) in the reported month. Stephen S. Poloz, the Governor of the Bank of Canada, suggests the economy rebound in the second half of the year rebound will be led by non-energy exports. Overall, exports jumped 3.4% to C$42.7 billion in July, driven by gains in nine out of eleven categories, whereas imports declined 0.1% to C$45.2 billion, posting the second decline in three months. Motor vehicle shipments advanced 6.2% in July, the first rise for six months, while exports of both metal and aircraft increased around 10%. Motor vehicle shipments advanced 6.2% in July, the first rise for six months, while exports of both metal and aircraft jumped around 10%. Not taking into account price changes, export volumes grew 3.7% and import volumes declined 1.2% in July. 

The USD/CAD pair fell sharply after the data release and was seen trading at $1.3020 with higher oil prices also providing support for the Canadian Dollar.