U.S. trade deficit falls to seven-month low

U.S. trade deficit falls to seven-month low”

But for the year, the deficit is still up 11.5 percent from a year ago despite President Donald Trump's vow to close the gap through new tariffs on imports and renegotiated trade deals.

Expectations were for the trade deficit to narrow to C$3.40 billion, according to economists at Royal Bank of Canada. The two-year fell 5 cents to yield 1.944 per cent and the 10-year declined 52 cents to yield 2.312 per cent.

"One is hard-pressed as to not concur that the U.S. economy not only remains on solid footing, but is likely to show an accelerated pace of growth in the second quarter", said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

The Canadian dollar strengthened to a near one-week high against its USA counterpart on Wednesday as domestic data showed a narrower-than-expected trade deficit but some gains were pared ahead of this week's G7 summit.

That's a good sign for an economy that will need the export sector to make a bigger contribution to growth as consumers scale back.

The agency said the deficit amounted to $1.9 billion compared with a deficit of $3.9 billion in March.

The all-time high amount of U.S. exports in April was driven upwards by growing orders for American corn and soybeans, a product that China has threatened with retaliatory tariffs, as well as fuel oil and other petroleum products. Exports increased $62.0 billion or 8.1%.

Natural gas prices grinded higher ahead of Thursday's inventory report from the Department of Energy. Canada has said it would slap tariffs on imports from the United States, including whiskey, orange juice, steel, aluminum and other products. Talks to head off a trade war between the world's two largest economies have so far failed to produce a resolution, even though China has offered to step up purchases of US farm and energy products.

Meanwhile, exports of some other commodities saw a decline in March such as crude oil, which decreased by 28 percent, potatoes (3.7 percent), pastries and various food preparations (1.2 percent) and fertilizers (48.1 percent). Shipments of metals and non-metallic minerals rose 9.1 percent, more than reversing the 7.8 percent slump seen in February, aided by solid sales of intermediate metals including unwrought gold.

Egypt has been seeing a drop in imports after it floated its currency in late 2016, making Egyptian goods in foreign markets attractively cheaper while doubling the cost of importing. And despite the decrease in April, the gap in goods trade with Mexico is up 4.8 percent this year. That followed a 0.3 percent growth pace in the fourth quarter.

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