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Trade Balance: International Merchandise Trade (CAD)

Developed by Statistics Canada, the International Merchandise Trade, or Trade Balance, is the difference in value between imports and exports. Trade Balance report is released one-month removed and offers insights into economic performance stemming from the import/export sectors.Canada is a net importer, thus a negative trade balance is normal. Key trading partners are the U.S. and China. Commodities such as crude oil, natural gas, machinery, and lumber products are key elements of the import/export dynamic. A shrinking trade balance is typically seen as a sign of economic growth and positive for the Canadian dollar (CAD). A growing trade balance is viewed as a symptom of an economic downturn and negative for the CAD.The production and exportation of energy products to the U.S. plays an important role in valuations of the CAD. If domestic crude oil and natural gas production levels are down, traders are likely to take a bearish stance toward the CAD. If up, the CAD flourishes. The Trade Balance report is not a primary market mover but may bolster periodic volatility and long-term investing practices involving the CAD.

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