Canada: Trade balance expected to swing to a modest surplus of $100 mln in April – BMO CM

In view of Benjamin Reitzes, Canadian Rates & Macro Strategist at BMO Capital Markets, Canada’s trade balance is expected to swing to a modest surplus of $100 mln in April.

Key Quotes

“The Canadian dollar matched its weakest average level in 14 months, which should provide some support to exporters, while rising oil prices likely drove exports higher as well. Note though, that there’s some downside risk due to the shutdown at Syncrude, though shipments can come out of inventories. We look for imports to be about flat, after solid gains over the past four months. We’ll be watching electronic & electrical equipment import volumes, which have a strong correlation with machinery and equipment investment, to see if there’s a bounceback after declines in February and March.”

“We’ll also be watching non-energy export volumes closely as usual, as they’ve failed to gain traction over the past two years. While trade looks to have subtracted meaningfully from Q1 GDP, the good handoff from March suggests a more favourable contribution to growth in Q2.”