08:52 AM EST, 01/08/2025 (MT Newswires) -- There's a situation in Canada where not only has the political outlook improved notwithstanding the current high level of uncertainty and the Bank of Canada's aggressive rate cuts have begun to finally percolate in the domestic credit-sensitive sectors, but the lags from the intense Canadian dollar (CAD or loonie) depreciation are kicking in as well, said Rosenberg Research.

Canada's goods trade deficit Tuesday came out for November and surprised to the downside -- C$32 million from a sharp downward revision to October of C$54 million from C$92 million and undercut the consensus estimate of a C$90 million shortfall.

Exports jumped by 2.2% moth over month in nominal terms and were also up 0.5% in real or volume terms, outpacing the 1.8% import expansion.

This should be a positive for what appears to have been a dismal November gross domestic product backdrop and perhaps lead to a small upward revision to Q4 as well, stated Rosenberg Research. This by no means suggests that Canada's central bank is done cutting rates, but the incoming data so far does support the BoC's forward guidance of easing up on the gasoline pedal.

Not surprisingly, the loonie has appreciated modestly on the news to C$1.4317, with the 50-day moving average residing at C$1.4137, pointed out Rosenberg. Even the most ardent Canadian dollar bears should be aware that the net speculative short position on the CME currently tallies a near-record 173,070 contracts against the currency, it added. That compares with 6,859 DXY net speculative longs on the Intercontinental Exchange -- a message here for contrarian investors.