Canada’s trade deficit hit a record high of $2.7 billion in July, far exceeding the $0.8 billion expected by economists. The July deficit was also revised higher to $1.8 billion from $1.1 billion. Canadian exports fell in the month to $32.8 billion from $33.0 billion with machinery and forestry lagging. Exports to the U.S. fell while sales to EU countries and Japan climbed. There was an unexpected climb in imports, especially from the United States. Energy imports climbed by 11.9% in the month, to make up a large portion of the $700 million rise in imports.

A separate report released at the same time showed signs of weakening in the Canadian housing market. Housing starts in August fell to 183.3k from 189.2k the prior month. Economists expected a 185.0k figure. In addition, the July new house price index fell 0.1% compared to the +0.1% expected.

Despite the disappointing round of Canadian data, CAD remains an outperformer. USD/CAD gained after the report but later touched off a session low due to unexpectedly strong U.S. jobless claims. On the session, USD/CAD is down 55 pips to 1.0320.