A reversal in commodity prices, including oil and gold, weighed on the Australian and New Zealand dollars on Thursday. However, the Canadian dollar was impervious to the plunge in crude – with which the currency normally has a strong correlation – as Canada’s current account balance nearly doubled forecasts as exports of goods surged through the first quarter.
The current account balance jumped to a C$5.6 billion surplus that was not only a strong rebound from the previous reading but also the largest positive gap for the series since the third quarter of 2006. Even more encouraging for the health of trade was the fact that the fourth quarter balance was revised from its previously stated deficit to a positive C$0.8 billion surplus. The data bodes very well for Friday’s Canadian Q1 GDP release. According to a Bloomberg News poll, economists expect growth to slow to a tepid 0.4 percent pace from 0.8 percent in Q4 2007. However, given the significant jump in exports, the data could be surprisingly strong and lead the Canadian dollar to rally, but regardless, traders should expect a pick up in volatility on this release.