Canadian Dollar Strengthens As 4Q Current Account Deficit Narrowed

By Trang Nguyen,

THETAKEAWAY: Canadian Current AccountDeficit Narrowed in the Third Quarter > TradedGoods Surplus Widened > CanadianDollar Strengthens vs. Most of its Counterparts

Canadiancurrent account deficit narrowed in thefinal quarter of lastyear on higher export, Statistics Canada reportedtoday. Thefourth -quarterseasonally adjusted deficit shrank 16percent to$ 10.3 billionfrom arevised C$ 12.3 billionin the third quarter. The reading ,however, missedconsensus forecast fromBloomberg survey as economists widely expected a shortfall of C $ 9.4 billion.Canad a’s balanceof international payments (BoP) account keepsbeing deficit since the fourth quarter of 2008 as weakglobal demand and currency ap preciation have dampenedthe nation’s exportingactivities.

Canadian Quarterly Current Account: 2008 Q1 to Present

Prepared by Trang Nguyen

Thecurrent account comprised transaction in goods, services,investment income and current transfer. Tradedgoods surplus unexpectedly jumped to C$3.13in the fourth quarter 2011 fromC$248million in the previous quarter as exportof goods soared C $ 6.68 billionto C$ 1 21.47 billion,the highest level since the third quarter of 2008. Incontrast , theservices deficit in last quarter widenedC$60 million toC$6. 16 billiondue to contracted commercial servicesurplus and widened transportation d eficit .

For the year as a whole, the current account deficit fell to C$48.3 billion in 2011 compared with a record high of C$50.9 billion in 2010.

USD/CAD 1-minute Chart: March 1, 2012

Charts createdusing Strategy Trader – Prepared byTrang Nguyen

Canada currency strengthens versus most of its major peer for the second day today and advanced against its U.S. counterpart for a fourth day, the longest string in more than a month, amid uneven broader rally in riskier assets and higher-yielding currencies. The minutes following the current account report, the Canadian dollar extended gains versus the reserve currency by approximately 20 pips. At the time this report was written, the loonie appreciated 0.45 percent versus the greenback, traded above parity at $1.0148.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

Tocontact Trang, email tnguyen@dailyfx.com
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2012/03/01/030112_CAD_Current_Account_4Q.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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