Canadian FinMin Says Currency to Weaken Further Amid Soft Commodity Prices

Canada’s weakening currency will probably face further pressure from persistently low commodity prices that also complicate the country’s fiscal situation, the nation’s finance minister said on Monday.

“Commodity prices are softening, affecting our terms of trade and making important inputs – so vital for our manufacturing sector – more expensive,” Bill Morneau said in his first public speech since being named to head the finance portfolio after the Liberal government’s election victory in October.

Morneau said he was encouraged by a recent uptick in the U.S. economy, but China and Europe were causes for concern.

“Going forward, it is very likely that global economic conditions will remain unfavorable and that subdued commodity prices will persist,” he said. “This of course has important implications for the currency and our fiscal situation.”

The Liberals campaigned on a platform to run budget deficits of up to C$10 billion ($7.3 billion) a year in order to spend on infrastructure to boost growth after the economy fell into a modest recession in the first half of the year.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza