Economy

Canada trade deficit falls as strong Canadian dollar cuts value of imports

Canada trade deficit falls as strong Canadian dollar cuts value of imports”

The data came too late to influence the Bank of Canada, which was due to make an interest rate announcement at 10 am ET (1400 GMT) on Wednesday.

It will take a few months to determine whether the last couple of rate increases impact the local property market, Dinani said.

As the nation is experiencing robust consumer spending, solid employment and steady income growth, the central bank says the rate hike is warranted.

"But the market seems to believe, I think, that there is going to be a continuation of this rate hike, either in October or it will continue on to the new year - that maybe the Bank of Canada is going to continue to be relatively aggressive".

There is a risk the bank could increase rates for a third time in 2017 if economic data continues to be strong, forecasters said, with 4 primary dealers expecting the bank will raise again in the fourth quarter.

The bank also said that although the global economy is seeing stronger than expected growth indicators there are "significant geopolitical risks and uncertainties around worldwide trade and fiscal policies remain, leading to a weaker United States dollar against many major currencies".

"So far, it still leaves rates low and manageable in terms of the ability of households to cope with that".

"That's what we should expect when the economy is doing well", the finance minister added.

However, the bump in the overnight rate won't help Vancouver's worsening housing affordability.

TD CEO Bharat Masrani told the conference that rising interest rates are a "positive phenomenon" for the financial institution.

Royal LePage realtor Adil Dinani said the Bank of Canada's half-percentage-point rate increase will likely have a "marginal" effect on Metro Vancouver's real estate market.

RBC, Toronto-Dominion Bank, Bank of Montreal, Canadian Imperial Bank of Commerce, and Bank of Nova Scotia have moved to increase their prime lending rate by 25 basis points from 2.95 per cent to 3.2 per cent, effective September 7.

If a further rate shock does occur, Holt is optimistic that Vancouver's market will prosper given its strong economy.

Canada's trade deficit shrank to C$3.04 billion ($2.45 billion) in July from C$3.76 billion in June, thanks in part to a stronger Canadian dollar that cut the value of imports, Statistics Canada said on Wednesday.



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