US goods deficit is set to widen - BBH

Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman notes that the US dollar and the Canadian dollar are as free floating as any currencies and adds:

"Canada enjoys a persistent goods trade surplus with the US.  For more than 30 years, the US has had a bilateral deficit with Canada.  Between 2010 and 2014, the goods trade imbalance averaged a little more than $30 bln a year.  The drop in the price of oil seems to be a key consideration that halved the deficit in 2015 and 2016.  The 2016 deficit was $11.2 bln, which is the smallest since 1993."  

"The US goods deficit is set to widen.  The US data is not seasonally adjusted, and in January and February combined the US recorded a $5.5 bln goods deficit with Canada.  In the first two months of 2016, it was a $3.5 bln deficit.  Relative price changed and grew differentials, rather than malfeasance, likely explains the change."