The Canadian dollar is weakening today with USD/CAD up 95 pips to 1.3573. That’s mostly from the US dollar side of the equation but I worry that the Canadian consumer could weaken more than markets are anticipating this year as mortgage resets bite.
Canadian trade balance missed estimates today in a surprise fall into a deficit. That was largely due to falling energy exports and lower oil prices but CIBC also eyed weakness in imports, which were down 1.1% in inflation-adjusted terms including a 5.7% decline in consumer goods.
“Weakness in exports and imports during November appear to largely reflect lower energy
prices and monthly volatility within areas such as pharmaceutical products. However, there are some signposts of
weakening global and domestic demand as well, particularly the decline in imports of toys and games suggesting that
more discretionary goods spending is weakening in line with the rise in interest rates,” CIBC writes.
USD/CAD daily: