08:50 AM EST, 02/06/2025 (MT Newswires) -- The good news for Canada is that the country moved back into a trade surplus in December -- the first surplus since February 2024, said Rosenberg Research.

However, the not-so-good news on Wednesday was that the black ink was lower than market expectations: C$0.71 billion instead of C$1.02 billion -- and to make matters a bit worse, November's deficit was revised sharply higher to C$0.99 billion from C$0.32 billion, noted Rosenberg Research.

With the help of higher oil prices, export receipts expanded by 5.1% month over month and are riding a four-month winning streak, making this the best month for exports since May 2022 -- but over half the bump was in prices, not volumes.

The weaker Canadian dollar is also percolating through the trade data, stated Rosenberg. Imports were barely up (+0.7%) after three consecutive months of decline.

For Q4 as a whole, volume exports expanded at nearly a 12% annual rate while imports expanded by almost 9%, so net trade, in contrast to the United States, is emerging as a bright spot for Canada in terms of supporting what otherwise is still a rather moribund economic backdrop, it pointed out.

At the margin, the trade data are a modest positive for the Canadian dollar (CAD or loonie), which, by the way, has improved to C$1.429 and has pierced the 50-day moving average for the first time since last August, added Rosenberg.

While Rosenberg remains fundamentally bearish on the currency, there are tactical reasons to be constructive, for if the U.S. trade tariff threat does subside, and the huge volume of net speculative short positions in the CME futures & options pits continue to cover their bearish bets, C$1.40 would be a reasonable short-term price objective for the "oversold" currency.