Morning Forex Fundamental: CAD

Morning Forex Fundamental: CAD

"The Canadian manufacturing sector continues to struggle against the collective headwinds of a sluggish U.S. economy and the persistent strength of the currency' - David Tulk, chief macro strategist at Toronto-Dominion Bank's TD Securities

Canada's current account deficit widened in the second quarter, however, less than initially was expected, as the number of imported cars increased, while exports of crude oil declined. On Thursday, August 29, the Statistics Canada said that a difference between imported and exported goods services, investment income, services and current transfers stood at –C$14.6 billion between April and June, compared with an upwardly revised C$13.4 deficit recorded in the preceding quarter. Analysts, however, expected a C$14.8 billion deficit. The main drag came from imports, which rose C$1.4 billion reaching C$121 billion, as imports of motor vehicles and parts, electronics and electrical equipment went up. Meanwhile, exports rose as well, however, it was not enough to offset an increase in import costs. Hence, total exports of goods ticked up C$0.2 billion to C$118.2 billion, boosted by a C$0.7 billion increase in exports of motor vehicles.

Canadian exporters have struggled to rebuild orders lost during the global crisis amid strong competition from emerging markets. Moreover, the Loonie trades near parity level against the greenback. Finally, domestic output was dragged down by flooding in Alberta and a construction strike in Quebec.