May's trade data from Canada may surprise with a large unexpected trade deficit and weigh on the Loonie. Analysts at CIBC point out that the numbers suggest that net trade won't be a big positive contributor to Q2 GDP, as had seemed likely prior to the release.

Key quotes: 

“The $3.44bn deficit was the largest since October 2020 and followed a downwardly revised $0.9bn surplus in the prior month.”

“The large swing relative to the prior month reflected both a decline in exports (-3.8%) and a rise in imports ( 3.0%).”

“Today's large swing in the trade balance suggests that net trade won’t be the big positive contributor to GDP in Q2 that seemed likely prior to today's release. That doesn't necessarily guarantee that the flash estimate of 0.4% growth for monthly GDP in May is an overestimation, because inventory accumulation could be stronger than previously assumed, although today's data does heighten downside risks.”