Today we got trade balance data from the US and from Canada. US Trade Balance for June shows a deficit with a reading of -41.5B. This however is narrower than May's -44.7B reading, and was better than expectations around -44.2B. Imports declined the most in a year, while exports ticked up by 0.1%. (source: tradingeconomics.com)Canadian Trade Balance for June showed a trade surplus of 1.9B, while forecasts called for a reading around -0.1B. May's trade balance reading was revised from -0.2B to 0.6B. The positive revision, and the dramatic improvement in trade balance is a result of a 1.8% decline in imports coupled with a 1.1% increase in exports. (source: tradingeconomics.com)Traders were probably more impressed with Canada's dramatic reversal from trade deficit back to a trade surplus. The export component in Canada's trade balance was also much better than that in the US trade balance. The USD/CAD indeed showed loonie-strength following the two trade balance releases. (USD/CAD 4H Chart)Looking at teh 4H chart you can see price retreat from 1.0986, accelerating after the US and Canadian trade balance data. Note that this bearish reaction is going against a medium-term bullish trend that started after price put in a bottom at the beginning of July, coming up from a low of 1.0620 to 1.0986. With the prevailing uptrend intact, we should treat the bearish reaction as a part of consolidation/correction. The first place to look for buyers will be in the 1.0875-1.09 area. If price approaches this area, and the 4H RSI approaches 40, look out for buyers to bring the pair back towards the 1.0986 high and the 1.10 handle.