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Global growth is widely viewed as the driving force behind the bull market, but Canada's trade surplus is expected to remain weak, while the U.S. trade deficit remains huge.

Canada's international merchandise trade surplus, which is scheduled for release today, is forecast to have declined to $600-million during February, compared with $800-million in January, according to a survey of economists by Bloomberg. The decline is likely to reflect a drop in energy prices and a rise in imports as a result of strong Canadian domestic demand, economists said.

What are the expectations? Domestic trade has managed to eke out a modest surplus during the past four months as global demand and generally higher commodity prices have more than compensated for the lost of competitiveness of Canadian exporters as a result of the rising Canadian dollar, said Millan Mulraine, a senior Canada macroeconomic strategist for TD Securities Inc.

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"In the months ahead, we expect the trade balance to continue its pendulum swings in and out of deficit as the combination of the strong [loonie]and import demand offset the benefits of higher commodity prices and the recovery in U.S. demand," he said.

The U.S. will also release its trade data today and economists forecast a trade deficit of $38.5-billion (U.S.) in February, compared with $37.3-billion in January.

Sharply lower agricultural export prices should offset higher foreign deliveries of aircraft manufacturer Boeing Inc. and the "revving" global economic recovery, said Michael Gregory, a senior economist with BMO Nesbitt Burns Inc.

How will market react? You have to look beneath the dollar values, said Stewart Hall, a currency and fixed income economist with HSBC Securities Canada Inc.

"What you need to look at are the trade volumes," he said.

The trade volume index is up about 12 per cent from its recession lows, Mr. Hall added, noting that the export data is being partly masked by growth of imports.

So investors should keep an eye on railroads such as CSX Corp., which reports its first-quarter results today. CSX operates in the central and eastern United States and stretches into Ontario and Quebec.

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Analysts forecast CSX's earnings at $3.25 (U.S.) in 2010 and $3.93 in 2011.

"Trade is loosening up, both east-west and north-south," said Paul Taylor, chief investment officer for BMO Private Banking, who focuses on Canadian railroads such as Canadian National Railway Co. and Canadian Pacific Railway Ltd.

Commodities like iron ore, copper, nickel and zinc are at good levels, Mr. Taylor said.

"We do like the rails."

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