Canada: Merchandise trade deficit likely narrowed to $1.5 bln in October – BMO CM

Robert Kavcic, Senior Economist at BMO Capital Markets, expects Canada’s merchandise trade deficit likely narrowed to $1.5 bln in October from a record $4.1 bln in the prior month.

Key Quotes

“Recall that a $2.9 bln piece of imported equipment for the Hebron offshore oil platform weighed heavily on the trade balance in September, so that should be reversed in this report. Meantime, Western Canada Select oil prices jumped 16% in Canadian dollar terms, while Brent and WTI were also higher, which should support exports.”

“The loonie also continued to weaken from the recent high set in the spring, while the U.S. economy just came in at a solid 3.2% growth print in Q3. One caveat is that while U.S. consumer demand was strong in the quarter, particularly for durable goods, M&E investment continued to contract, including that for industrial and transportation equipment—the latter is likely one reason Canadian non-energy export volumes have struggled to find any momentum lately.”