This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The Canadian dollar weakened to a three-year low against its US counterpart today after Canada’s merchandise trade deficit increased to C$940 million from C$908 million in October. October’s figures had originally been reported as a $75 million surplus, while economists had forecast a deficit of only $900 million for November.
This was in contrast to the US, where the November trade balance narrowed to a four-year low. By mid-afternoon in New York, USD/CAD had risen 0.94% to 1.0755, while sterling gained 0.98% against the Loonie.
One of the driving factors behind the shrinking US trade gap was lower imports of oil, which fell to its lowest level in three years. Oil is Canada’s biggest export, while the US is its largest trading partner.
Also weighing on the Canadian dollar today was the Ivey PMI for December, which fell to 40.2 from a reading of 48.2 in the month prior, which suggests that not only is business activity in contractionary territory, but it appears to be slowing.
Canadian Finance Minister Jim Flaherty said in an interview earlier this week that a weaker Canadian dollar helps the nation’s manufacturers.