- Benjamin Reitzes, BMO Capital Markets senior economist
Canada's current account deficit narrowed slightly in the June quarter to register the smallest gap in more than two years as exports rose to record dollar value and foreign investment remained strong. According to Statistics Canada, the shortfall was 11.87 billion Canadian dollars, compared to the revised C$12.03 billion in the three months through March. Economists, however, had expected current account deficit of C$11.80 billion. The data showed that Canada's exports gained momentum in the second quarter, with total exports rising by 3.0% to hit a record C$132.35-billion amid higher shipments of motor vehicles and parts, grains and forestry products. Nevertheless, exports of energy products, which accounted for 25.4% of all exports in the April-June quarter, declined by 3.5% to C$33.64-billion. Canadian economists remain upbeat, forecasting the export sector to continue its recovery, leading to better output and driving the current account towards a balance in the future. Meanwhile, total imports increased by as much as 3.2% to C$130.72-billion on greater imports of motor vehicles and parts, consumer goods, chemical plastic and rubber products.
The U.S. Dollar strengthened versus its Canadian counterpart on the back of strong U.S. economic growth data and jobless claims report, recovering from one-month trough. USD/CAD rebounded from 1.0837 to fetch 1.0857 during early U.S. trading session.
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