The deficit between exports and imports narrowed in February in Canada to 1 billion. The March deficit is forecasted to be lower as the effect of a weaker CAD continues. The estimate of a -0.6 billion gap will be a good sign, but some concerns have been raised about the declining volumes of both exports and imports. Energy exports have suffered as the price of oil hit a slump as the supply glut worsened only to recover in the last month. The Canadian economy has not found a way to transition away from its energy exporting dependancy and a worse than expected trade balance could signal further trouble for the loonie.
The USD/CAD was lower after U.S. economic data had disappointed but it has managed to get back on track after the FOMC statement was released. While not a glowing endorsement of U.S. economic strength it did not signal a change of course for the Federal Reserve whose members still see a benchmark interest rate hike later this year. The question of the timing has been left dependant on economic data. This adds some volatility to data releases and explains some of the enthusiasm for the U.S. unemployment claims release that marked the best week in 15 years boosting the USD against all major currencies. Canadian and U.S. employment figures will be released on Friday as the biggest economic indicator in forex, the non farm payrolls report is published at 8:30 am EDT.