|

Canada: Trade deficit surge and 2026 outlook – RBC

Royal Bank of Canada (RBC) analysts note Canada’s trade deficit widened sharply in February to CAD 5.7 billion, far above expectations, as both exports and imports jumped. They highlight one-off Gold imports, stronger equipment and consumer goods demand, and surging motor vehicle exports. RBC expects March’s nominal deficit to narrow and sees 2026 trade as a smaller drag on Canadian growth.

Deficit spike, Gold imports and 2026 trade

"Canada's international trade data is notoriously volatile, and February's report was no exception with an unexpected surge in the Canadian trade deficit to a $5.7 billion deficit -- larger than market expectations for $2.5 billion shortfall."

"Both exports and imports jumped sharply higher, with about a third of the latter coming from a surge in imports of gold products but also stronger equipment and consumer goods imports."

"That leaves net trade tracking a sizable subtraction from Q1 GDP growth, but also offsetting strength in business and consumer spending by domestic buyers."

"And exports of motor vehicles surged higher, adding to evidence that a run of production disruptions that weighed on manufacturing output in late 2025 and early in 2026 is easing."

"And the nominal trade deficit will likely shrink in March with the surge in gold imports in February not likely to be repeated."

(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

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold holds steady below $4,500; looks to US NFP for fresh impetus

Gold consolidates its strong gains recorded over the past two days and trades below $4,500 during the Asian session on Friday, awaiting the US NFP report for cues about the Fed's policy path amid reduced September rate-hike bets. In the meantime, the recent fall in US bond yields keeps the US Dollar depressed and acts as a tailwind for the non-yielding bullion.

Bitcoin and Gold Outlook: BTC and XAU recover as US ISM Services PMI edges higher in August
Bitcoin (BTC) strongly rises to trade above the pivotal $80,000 level on Thursday. The Crypto King is rallying alongside broader cryptocurrency prices following the release of the United States (US) Services PMI. Gold (XAU/USD) is similarly bullish, trading at $4,500 at the time of writing. The metal is up over 2% on the day, signaling the return of bulls as market sentiment improves.
Canada's 6.4% unemployment rate: Why Friday's jobs print puts the BoC's slack story on trial
The Bank of Canada (BoC) held at 2.25% on Wednesday for a seventh straight meeting and rewrote the one paragraph that still argues against a hike. In July, the BoC’s statement called the labour market soft and pinned the unemployment rate inside a 6.5%-7% range it had held since the end of 2024. July's Labour Force Survey (LFS) then printed 6.4%.
Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.