Canadian Finance minister Bill Morneau announced the date that the Liberal government will deliver their first budget plan of the Trudeau administration. March 22 is a date to be recorded in the calendar as economic conditions have deteriorated from when the Liberal government won the elections after the longest campaign on Canadian history. The Liberal party made it a part of the campaign to invest in infrastructure and to spend to boost growth. The Conservative government left behind a growing deficit that had not been taken into account and with energy prices stable but low after a rapid fall the Liberal government has already back down on its promise to return to a surplus at the end of 4 years.
The Canadian government is forecasting a deficit of $2.3 billion in 2015, $18.4 billion in 2016-17 and $15.5 billion in 2017-18. The deficit figures are before taking into consideration the new stimulus that is to be unveiled on March 22.
The Bank of Canada (BoC) delayed a rate cut in January opting to wait for the government to announce its budget and wait for the market to react before committing to a monetary policy action with little runway left.
The USD/CAD retreated as the price of oil started the week strong. The negative correlation with the pair continues as comments from the Organization of the Petroleum Exporting Countries (OPEC) and a reduced output forecast for Shale producers from the International Energy Agency (IEA) boosted the price of West Texas to $31.30 per barrel. The markets are taking the current price levels as a bottom for the price of oil after a rapid decline in the beginning of the year.
The USD/CAD depreciated 0.424 percent in the last 24 hours as energy prices rose. The pair is trading at 1.3708 after managing to print a session low of 0.7729.
The Canadian economic calendar is bare this week with the budget data announcement out of the way. Canadian banks will report earnings this week with expectations of energy slump implications but overall show a solid Canadian financial system. There are few major events this week in a global scale and all eyes will be on the weekend meeting in Shanghai of the Group of 20. With so much chatter about cooperation it is expected leaders and finance ministers will try to reach some sort of pledge to present a unified front as the global slowdown persists.
FX Market events to watch this week:
Tuesday, February 23
4:00am EUR German Ifo Business Climate
6:15am CHF SNB Chairman Jordan Speaks
10:00am USD CB Consumer Confidence
Wednesday, February 24
10:30am USD Crude Oil Inventories
7:30pm AUD Private Capital Expenditure q/q
Thursday, February 25
4:30am GBP Second Estimate GDP q/q
8:30am USD Core Durable Goods Orders m/m
USD Unemployment Claims
Friday, February 26
8:30am USD Prelim GDP q/q
*All times EST
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar