Loonie fell 1.7 US cents in June, its steepest monthly drop since 2022
Canada's merchandise trade surplus widened to $3.9bn in June, its highest level in four years, as a softer Canadian dollar inflated the value of goods moving across the border.
Statistics Canada reported the surplus climbed from a revised $3.7bn in May, its fourth straight monthly reading in the black and the widest since May 2022.
Economists polled by Reuters had expected a narrower gap near $3bn.
The agency also revised May's figure down sharply from an initial $4.24bn.
Much of the June s5hift reflected currency movement rather than trade activity.
The average value of the loonie fell 1.7 US cents against the greenback, the agency said, the steepest monthly drop since October 2022.
Because most cross-border transactions settle in US dollars and are converted for the official statistics, a weaker loonie mechanically raises reported values.
"All other things being equal, when the Canadian dollar depreciates against the US dollar, monthly trade values expressed in Canadian dollars are higher," Statistics Canada said.
That distortion runs through the headline figures.
In Canadian-dollar terms, exports rose 0.4 percent and imports edged up 0.2 percent; in US-dollar terms, by contrast, exports fell 2.0 percent and imports dropped 2.1 percent, according to the agency.
Stripping out prices, export volumes climbed 1.1 percent while import volumes slid 1.5 percent, a split that points to underlying momentum in shipments.
That distinction matters for gross domestic product (GDP), which economists expect to rebound after flat growth in the first quarter.
TD Economics economist Marc Ercolao said the June data should reinforce expectations of a GDP recovery.
"However, signals in trade remain noisy given the still-outsized swings in energy, autos, gold and computer equipment-related flows," he wrote in a note cited by Reuters.
Gold did much of the heavy lifting on the export side.
Exports of metal and non-metallic mineral products jumped 16.5 percent, led by a 27.9 percent surge in unwrought gold and related metals as shipments to the United Kingdom rose and foreign buyers picked up Canadian-held gold.
Total exports reached a record $77.5bn, a fifth consecutive monthly gain.
Energy exports pulled the other way, falling 10.0 percent as crude oil prices eased.
On the import side, a 59.0 percent jump in computers and computer peripherals, driven by processing units of the kind used in data centres and sourced from the United States, lifted total imports to a record $73.6bn.
Excluding electronic and electrical equipment, imports would have fallen 1.3 percent, the agency noted.
Canada's exposure to the American market stayed pronounced, with 69.5 percent of exports heading south in June.
Exports to the US rose 0.3 percent and imports from the country climbed 3.0 percent, narrowing Canada's bilateral surplus with the US to $9.98bn from $11.12bn in May.
Prince Owusu, senior economist at Export Development Canada, offered an upbeat read on the second half.
"Overall, I think that we should do quite well for the second half of the year," he told Reuters by phone, flagging potential gains in gold and auto shipments.
Over the second quarter as a whole, exports rose 13.1 percent, the strongest quarterly gain since the third quarter of 2020, while imports advanced 4.2 percent.
The trade rebound tracks the view from the Bank of Canada, which held its policy rate at 2.25 percent on July 15 for a sixth consecutive decision.
Export growth has resumed and is expected to keep strengthening, albeit on a lower path, the central bank said, estimating second-quarter GDP growth at about 2.5 percent.
The bank also tied the loonie's slide partly to rising US bond yields while Canadian yields held little changed.
It added that the Canada-United States-Mexico Agreement (CUSMA) is now subject to annual reviews, though more businesses report finding ways to navigate the uncertainty.
