Trade deficit has been declining in Canada, and today the trend continued, but the CAD to USD rate didn’t reflect much, as USD/CAD trades around 1.3570. There was a surge earlier which sent the price above 1.36, but buyers couldn’t keep this pair above there for too long and now USD/CAD has retreated 30 pips lower.

Canadian Q4 Current Account Report

• Canada’s Q4 current account deficit was reported at -1.62 billion, higher than the expected -1.25 billion. The previous figure was revised to -4.74 billion from -3.22 billion.
• The trade in goods and services balance showed a $1.2 billion surplus in the fourth quarter, a significant change from the third quarter’s deficit of $2.0 billion. Exports of goods increased by $2.9 billion to $195.0 billion, while imports rose by $0.3 billion.
• The investment income balance shifted from a slight deficit in the third quarter to a slight surplus of $112.0 million in the fourth quarter.
• Portfolio investments resulted in a net outflow of funds from the economy amounting to $21.5 billion in the fourth quarter.
• For the entirety of 2023, the current account balance registered a deficit of $17.8 billion, marking an increase of $7.4 billion compared to 2022.

Overall, the data suggests a mixed picture for Canada’s current account, with improvements in trade balances partially offset by shifts in investment income and portfolio investments. Yesterday the Canadian dollar experienced a decline and continued to weaken, which was reflected in the USD/CAD pair, as it kept rising earlier today as well. The pair surpassed the 1.3600 level, reaching as high as 1.3605 before encountering resistance from sellers. Subsequently, a move below the high price from two weeks ago at 1.3585 intensified selling pressure.

As long as USD/CAD remains above the 100-day moving average and the high of the swing area below 1.3545, buyers are expected to maintain control. However, a break below that level could disappoint buyers who entered the market following the upward breakout.

USD/CAD Live Chart