ActionForex reports that analysts at TD Bank Financial Group discuss Canada's June trade balance data.

"Canada recorded a merchandise trade surplus of $3.2 billion in June, following a deficit of $1.6 billion in May. Merchandise exports surged 8.7% (m/m), whereas imports fell 1.0%. Stripping away price effects, export volumes advanced an impressive 7.0% while import volumes fell by 2.2%."

"In June, Canadian exports benefitted from robust demand for energy products and a rise in auto production. However, production levels remain extremely low in the auto industry, largely reflecting global shortages for semiconductor chips. On the opposite side of the ledger, the drop in import volumes points to some moderation in domestic demand during the month. Notably, import volumes for machinery/equipment and consumer goods both declined, sending a subdued signal for business investment and consumer spending, respectively."

"For the second quarter overall, merchandise export volumes plunged 4.7%, while import volumes were flatter (-0.6%). This suggests that net trade weighed on second quarter economic growth."

"We continue to receive mixed signals on the outlook for trade going forward. We expect global economic growth to continue in the second half, with a strong performance recorded in the U.S. However, the Delta variant is a growing risk. In addition, the recovery in service exports is expected to lag until travel/international tourism restrictions are more significantly eased. Supply chain disruptions are still being reported in manufacturing PMI surveys, suggesting continued volatility in the data going forward."