|

Canada: Automotive shock and energy support – NBC

National Bank of Canada (NBC) analysts note that Canada’s merchandise trade deficit widened sharply in January, reaching its largest level in five months, mainly due to temporary disruptions in the automotive sector. They highlight steep declines in automotive exports and related imports, partly offset by stronger natural gas exports to the United States following an unusually cold January and higher demand.

Auto disruptions widen trade deficit

"Canada's merchandise trade deficit expanded much more than economists had expected in January and was the widest in five months."

"This surprise was largely due to temporary disruptions in the automotive industry which led to the largest decline in nominal exports since April 2025."

"With the United States being the main destination for our automotive exports, we might have expected our trade surplus with our southern neighbour to shrink more than it did, but the loss was partially offset by a 23.7% increase in our natural gas exports."

"It should be noted that the United States experienced an unusually cold January, which contributed to increased demand (and prices) in this segment."

"Lower imports, meanwhile, partly reflected a drop in the automotive segment (for the same reasons mentioned above), but also a decline in the electronics category that Statistics Canada attributed to reduced imports of smartphones from China amid a semiconductor shortage."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.


Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations
Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.
BoJ recap: A pause for now... but Japan has entered a new inflation phase
The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.
The 2% inflation target came from a throwaway remark. It now moves trillions
The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.