According to ActionForex, analysts at TD Bank Financial Group note that Canada’s international merchandise trade balance switched to a $1.4 billion surplus in January, following a deficit of $2 billion in December, aided by a strong 8.1% (m/m) increase in nominal exports. Meanwhile, imports were up 0.9% on the month.

"The increase in exports was broad-based, with all 11 industries expanding on the month. A sizeable portion of the strong headline increase was driven by a transitory spike in the volatile aircraft and other transportation equipment and parts (+72.3%) category. Statistics Canada cited that a Canadian airline had retired a large number of aircrafts in its fleet, which were then exported to the United States."

"The increase in imports spanned 7 of the 11 industries, with the headline increase largely driven by greater energy imports (+20.5%). Imports of industrial machinery and equipment were up 3%."

"Canada’s merchandise trade surplus with the U.S. widened to $6.2 billion (from $2.5 billion in December). This is the largest trade surplus with the U.S. since late 2008. Meanwhile, Canada’s merchandise trade deficit with the rest of the world widened to $4.8 billion (from $4.5 billion in December)."

"January’s strong international trade report joins a list of other indicators in suggesting a better-than-expected start to 2021 for the Canadian economy. It is important to highlight that part of January’s export strength is transitory, including sizeable contributions from the volatile aircraft component and unusually high transactions of retail gold bars."