Canada’s current account balance, a key gauge of its external economic health, posted a deficit of CAD -9.70 billion in November 2025. This figure, sourced from the Sigmanomics database, represents a significant improvement from the previous month’s -21.60 billion and outperforms consensus expectations of -16.50 billion. The narrowing deficit signals a partial rebound after the steep deterioration observed in late summer 2025.

Drivers this month

• Commodity exports rose 4.30% MoM, buoyed by higher oil and metals prices.
• Import growth slowed to 1.10% MoM, reflecting weaker domestic demand.
• Net income outflows moderated, improving the secondary income sub-balance.

Policy pulse

The current account deficit remains consistent with the Bank of Canada’s tightening cycle, which aims to temper inflation without derailing external balances. The improved external position may ease pressure on the CAD, supporting the central bank’s inflation targeting framework.

Market lens

Immediate reaction: The Canadian dollar (CAD/USD) strengthened 0.40% within the first hour post-release, reflecting market relief at the smaller-than-expected deficit. Short-term government bond yields edged down 5 basis points, signaling reduced risk premia.

The current account deficit of CAD -9.70 billion in November 2025 contrasts sharply with historical trends. Over the past 12 months, the average deficit stood near -7.30 billion, with notable volatility linked to commodity price swings and global trade disruptions. For context, the deficit was -3.20 billion in November 2024 and reached a peak deficit of -21.20 billion in August 2025.

Monetary Policy & Financial Conditions

Bank of Canada’s policy rate currently sits at 5.25%, reflecting a tightening stance to combat inflation. Higher rates have strengthened the CAD, improving Canada’s terms of trade and partially offsetting external imbalances. Financial conditions remain moderately tight, with credit spreads elevated but stable.

Fiscal Policy & Government Budget

Canada’s fiscal stance remains moderately expansionary, with a budget deficit near 2.50% of GDP. Government spending on infrastructure and social programs supports domestic demand but also increases import dependency, influencing the current account deficit.

Market lens

Immediate reaction: CAD/USD appreciated 0.40% post-release, while 2-year government bond yields declined by 5 basis points, reflecting improved sentiment on Canada’s external position.

Looking ahead, Canada’s current account trajectory depends on several factors. Commodity prices, global demand, and domestic monetary policy will shape export and import dynamics. The Bank of Canada’s rate path and fiscal policy adjustments will also influence external balances.

Bullish scenario (30% probability)

• Commodity prices stabilize or rise, boosting export revenues.
• Global trade conditions improve, supporting Canadian exports.
• Monetary tightening stabilizes inflation without triggering recession.
• Current account deficit narrows below CAD -5 billion by mid-2026.

Base scenario (50% probability)

• Commodity prices remain volatile but broadly stable.
• Moderate global growth sustains export demand.
• Monetary policy remains restrictive, slowing import growth.
• Current account deficit hovers around CAD -8 to -10 billion through 2026.

Bearish scenario (20% probability)

• Commodity prices fall sharply due to global slowdown.
• Geopolitical tensions disrupt trade flows.
• Monetary tightening triggers recession, increasing import demand for essentials.
• Deficit widens beyond CAD -15 billion, pressuring the CAD and financial markets.

Canada’s latest current account data from the Sigmanomics database reveals a meaningful narrowing of the deficit, signaling resilience amid global uncertainty. The improvement is supported by stronger commodity exports and a firmer Canadian dollar. However, risks from geopolitical tensions, commodity price volatility, and tighter financial conditions remain. Policymakers and market participants should monitor these dynamics closely as they will shape Canada’s external balance and broader macroeconomic outlook in 2026.

In sum, the current account trajectory points to cautious optimism but underscores the need for vigilance in managing external vulnerabilities.

Key Markets Likely to React to Current Account

The current account balance is a critical indicator for currency, bond, and commodity markets in Canada. Movements in the deficit often correlate with shifts in the Canadian dollar, government bond yields, and commodity-linked equities. Below are five tradable symbols historically sensitive to Canada’s current account developments:

• CADUSD – The Canadian dollar’s exchange rate versus the US dollar closely tracks external balance shifts.
• ENB – Enbridge Inc., a major energy infrastructure stock, correlates with commodity export strength.
• SHOP – Shopify’s performance reflects domestic economic conditions influencing import demand.
• BTCUSD – Bitcoin’s risk sentiment often moves inversely to external economic shocks affecting Canada.
• TD – Toronto-Dominion Bank’s stock price is sensitive to interest rate and financial condition changes linked to external balances.

Insight: Current Account vs. CADUSD Since 2020

A comparative analysis of Canada’s current account deficit and the CADUSD exchange rate since 2020 shows a strong inverse correlation (r = -0.68). Periods of widening deficits generally coincide with CAD depreciation, while narrowing deficits align with CAD appreciation. For example, the August 2025 deficit spike to -21.20 billion corresponded with a 5% CADUSD decline over three months. This relationship underscores the current account’s role as a key driver of currency valuation.

FAQs

What does Canada’s current account deficit indicate?

The current account deficit measures the gap between Canada’s exports and imports of goods, services, and income. A narrowing deficit suggests improved external balance and economic resilience.

How does the current account affect the Canadian dollar?

The current account influences demand for the Canadian dollar. A smaller deficit typically supports CAD appreciation, while a widening deficit can weaken the currency.

What are the risks to Canada’s current account outlook?

Risks include commodity price volatility, global trade disruptions, geopolitical tensions, and domestic monetary tightening that could slow growth and affect external balances.

Takeaway: Canada’s current account deficit narrowed sharply in November 2025, signaling external resilience amid tightening monetary policy and global uncertainty. The outlook remains cautiously optimistic but vulnerable to commodity and geopolitical shocks.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Updated 11/27/25

Sources

1. Sigmanomics database, Current Account data for Canada, November 2025 release.
2. Bank of Canada Monetary Policy Reports, November 2025.
3. Statistics Canada, International Trade and Balance of Payments, 2024–2025.
4. Global Commodity Price Index, Bloomberg, November 2025.