Canadian Dollar: Trade surplus seen narrowing – TD Securities

TD Securities analysts anticipate Canada's International Merchandise Trade surplus to diminish in June due to the impact of falling oil prices on energy exports. They anticipate a surplus of $2.5bn, in contrast to market projections of $3.0bn and the previous month's $4.2bn. Non-energy exports, particularly automobiles and manufacturing, are expected to counterbalance the decline from the energy sector, while surging imports will contribute to a smaller surplus.

The international merchandise surplus is projected to fall to $2.5bn in June (market: $3.0bn) from $4.2bn in the preceding month as oil exports suffer significantly due to the large decline in crude oil prices. Although oil prices dropped by around 15% in June, early indications from US imports suggest a more gradual decline, hinting at a potential recovery in real energy exports following their 4% decrease in May.

Non-energy exports are anticipated to mitigate the energy-related decline, backed by a further strengthening in auto production alongside revised estimates indicating a 2.2% rise in non-energy manufacturing sales in June. Stronger imports will also play a role in reducing the trade deficit, and the overall trade balance is projected to show a smaller decline, thanks to the alleviation of the energy price drag.