09:28 AM EDT, 08/07/2024 (MT Newswires) -- The Canadian dollar (CAD or loonie) received a reprieve with Tuesday's news that the trade balance swung "violently" from a C$1.61 billion deficit in May to a C$640 million surplus in June -- the first move into black ink in four months, said Rosenberg Research.

Not to mention it was a huge surprise to a consensus expecting a C$2 billion shortfall. May's gap was also revised down from a C$1.9 billion deficit previously.

However, before investors get overly excited, the June surprise was fueled principally by a 5.5% export surge that was powered by a boom in outbound crude oil shipments (+13.3%) linked to the Trans Mountain pipeline expansion, noted Rosenberg Research.

Then tack on another unusually sharp run-up in unwrought gold

exports, which ballooned 35.3%. Over three-quarters of the export boom came from these two sources alone.

That's Canada, for you -- actual gold and liquid gold, stated Rosenberg.

Imports also climbed 1.9% m/m in June, but the components weren't so encouraging -- inbound consumer products jumped 3.7% m/m. Rosenberg wondered, given the soft state of

household demand, the extent to which these goods are now sitting on the shelves (and primed for discounting) while imports of industrial machinery and the like were roughly flat and inbound shipments of electronic/electrical equipment and parts slid 3.1%.

This should act as a signal to the Bank of Canada (BoC) that business investment is on a weakening path, according to Rosenberg.

It does look like Q2 net exports provided a drag on gross domestic product (GDP) even with the better tone to June and that real growth will be challenged to do any better than a +2.0% annual rate. This is rather disappointing because the civilian population expanded at a record 3.6% annual rate in Q2 (the fourth straight quarter of negative real per capita GDP

growth), added Rosenberg.