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The recovery of the northern nation’s trade surplus, comes after numerous reports this year that have shown steady gains in housing and wholesale sales along with a drop in the unemployment rate. The BOC has reportedly stated that both output and a key measure of inflation have been higher than expected, leading many economists to believe that the central bank will being raising the benchmark interest rate from 0.25% in the third quarter – well ahead of the U.S Fed.

Released at the same time as the trade balance, the New House Price Index (NHPI) showed a 0.1% increase in the selling price of new homes for February. While smaller than the 0.5% increase the market had predicted, this increase in the NHPI is the eighth straight monthly increase in the selling price of new homes. On a year-to-year basis, new home prices have increased 0.9% between February 2009 and February 2010.

The Canadian Dollar was little changed by yesterday’s close – appreciating 0.11% against its American counterpart to end the day at C$1.00140. However, in the Asian trading session this morning, the Loonie crossed the parity line, to hit a session hit of C$0.99846.

Canada was not the only country rejoicing a better than expected trade balance. Across the channel the U.K’s goods trade gap with the rest of the world narrowed sharply in February to its smallest size since June 2006, after exports rebounded sharply from a weather related weakness in January. The office for National Statistics reported yesterday, that the Britain’s trade deficit lessened from January’s 17 month high of £8.1 billion to £6.2billion in February.

The decrease in the country’s deficit can be attributed to a massive surge in overseas chemicals sales which pushed the number of exports to jump 9.5% from the previous month, the biggest increase since January 2003.

Analysts welcomed this news which indicates that euro-zone growth is finally picking up after faltering at the beginning of this year – as the EU is the one of the U.K’s biggest trading partners, U.K exporters are ardently hoping that if this continues the forex online trade will get strengthen as well.

The unexpected news pushed the Pound to $1.5390, appreciating as much as much as 0.2% against the USD. During yesterday’s trading session, the British currency reached as high as $1.54475; however, despite crossing the important 1.54 mark, the Pound fell to close the day at $1.53858.

Across the Channel, the Greek crisis seems near to an end. The €45billion aid package offered to Greece, sent helped eliminate some of the uncertainty around Greece, and helped the debt stricken nation in yesterday’s bond sale. The 52 week bills were sold at 4.85% while the 26 week bills were sold at 4.55%, more than double what Greece paid in January for loans of the same maturities.

While it appears investors are willing to buy Greek debt, they are doing so only if they are well compensated. Unfortunately for Greece, this may raise concerns about debt servicing, creating doubt about whether the psychological support provided by the EU is enough.  Investors are advised to continue to monitor news regarding the aid package. New developments about Greece’s debts or aid plan would have an impact over the euro against its major counterparts.

After sharp moves on both Friday and Monday, the Euro seems to be stabilizing. While the single European currency depreciated 0.36% yesterday to close $1.35441, the EUR has already erased all of yesterday’s losses, advancing to a high of $1.36641 in this morning’s Asian session.

The main factors which brought about the revision were lower levels of personal and government spending and lower levels of investment. The figure is up significantly on the 2.2% annualized rate of growth seen in the third quarter of 2009, it is also the strongest reported since the third quarter of 2003. The Commerce Department said that the pickup in inflation adjusted growth or ‘real GDP’ reflected rebounds in business investment in equipment and software as well as net exports.

In Japanese retail sales jumped sharply in February as government stimulus measures encouraged consumers to spend, official figures have shown. Sales rose by 4.2% from a year earlier, much more than analysts had expected. The rise happened despite falling prices in Japan, which usually encourage consumers to spend less and wait until prices fall further. Analysts said the rise was unsustainable given the deflationary pressures in Japan.

“Given the stagnant income situation, this sizeable rise in retail sales is too good to be true,” said Seiji Shirashi at HSBC Securities in Tokyo. “Some government stimulus measures will continue until April and others will last until September. After these incentives expire, there should be a big negative rebound in retail sales”.

On Friday the Yen fell for the fourth straight day against the Euro, its longest losing streak in five weeks as the global recovery gathers momentum boosting demand for higher yielding assets. The Yen fell to JPY 124.41 against the Euro on Friday.

In the wake of last week’s budget announcement in the UK opinion polls are still showing no clear lead for either party. Pundits feel the General Election is unlikely to be called before the Easter break with a date in early May looking more likely. On Friday Sterling held on to its gains from earlier in the week, climbing 0.60% against the US Dollar to close trading at GBP 1.4894 in the forex online market.

This week sees a relatively slow start to the week in terms of data but things will pick up on Wednesday and the end of the week will bring the release of the US Non Farm Payrolls and Unemployment reports as well as the Good Friday holiday in most trading centers.

In the UK yesterday economists warned of a “sluggish” recovery in the economy this year, ahead of tomorrow’s Budget. The Confederation of British Industry said it expected the economy to grow by 1% in 2010, with the recovery remaining subdued until the middle of next year. The government forecasts growth of 1.25% this year and 3.5% for 2011. However the Chancellor, Alistair Darling, may revise those predictions in the Budget tomorrow.

After the report was released the Pound weakened further against both the US Dollar and the Euro, it closed trading down 0.36% against the Euro at EUR 0.8978.

British Consumer Price Index data is due to be released later today. Governor King from the Bank of England said yesterday that first quarter inflation was likely to be in line with the Banks forecast of 3.1%

Chancellor Alaistair Darling has reiterated there will be “no giveaways” ahead of the general election. The budget is expected to focus on encouraging private sector investment and securing long term economic growth. The government plans to halve the budget deficit – which is one of the highest in Europe and is expected to hit about 12.6% of GDP this financial year, well above the European Union threshold of 3% – over the next four years.

The Pound has had its worst annual start in the currency market in 13 years, dropping 7% against the US Dollar since January. The currency has been weakened by uncertainty regarding the outcome of the general election which Prime Minister Gordon Brown must call by June. The government was forced to borrow heavily during the recession resulting in one of the highest deficits in Europe. Mr. Darling has said that while there had been signs recently that the economy was improving, with unemployment falling and government borrowing lower than forecast there was still a lot of uncertainty.

He said “the mood of the times is not for giveaways. People are not daft, they know perfectly well we need to get borrowing down and secure (economic) recovery”.

The uncertainty about who will win the election and whether there will be a hung parliament has resulted in a bearish trend in Sterling. A minority government is looking increasingly probable according to recent UK opinion polls and sentiments are sharply divided between the Labor and Conservative parties on how to achieve the necessary spending cuts.

Elsewhere in the forex online market the Canadian Dollar fell for a third day, the longest losing streak since January as crude oil prices continued to fall. The loonie rose in 12 of the last 16 sessions to reach C$1.0062 last week, the closest to parity with the U.S. dollar since 2008. It has risen 3% this month for the second best performance among the 16 most traded counterparts against the US Dollar. South Africa’s Rand which also relies on commodities for export revenue preformed best.