Canada's Q1 balance of payments will be released on Thursday, and the headline figure is expected to show another moderate deficit in the current account, which is the broadest measure of trade, says Bank of Montreal (BMO).
The gap is likely to widen a bit from the prior quarter to around a $10 billion annual rate, or just 0.3% of gross domestic product, it adds.
However, BMO notes, that's smaller than a year ago, and the four-quarter trend will, as such, likely improve a bit, to just under $30 billion, or 0.9% of GDP.
BMO expects much more "substantial" improvement in the coming quarters. First, the jump in oil prices will at least temporarily boost nominal exports, likely sending the current account into a surplus for a spell, it said.
More fundamentally, the current exchange rate points to more sustained improvement in the underlying trade ahead. The Canadian dollar (CAD or loonie) tends to lead the current account by about three years -- when the loonie is soft, as is now the case, it tends to eventually strengthen the current account over time, added the bank.
As a really rough guide, it appears that a currency of around $1.33, or about 75 cents (US), is consistent with a rough balance in the current account, said BMO. That's what the bank judges to be about long-run fair value for the currency.