The Canadian dollar is almost unchanged on Tuesday. In the North American session, the pair is trading a t1.3408, down 0.03%. In the U.S., building permits slowed to 1.30 million, shy of the estimate of 1.32 million. CB consumer confidence is expected to improve to 132.1 points. On Wednesday, Canada releases trade balance.
Stock markets dived on Friday after U.S. treasury bonds indicated the dreaded inverted yield curve, which is considered a recession indicator. Canadian bonds are also the inverted yield curve, pointing to a growing risk of recession. The Bank of Canada has taken a page out of the Federal Reserve playbook, freezing rates so far in 2019. If economic data remains lukewarm, the bank may have to consider a rate cut later in the year.
The Federal Reserve has become ever more dovish, leaving investors in a glum mood. At last week’s meeting, policymakers indicated they had no plans to raise interest rates in 2019 and also lowered its growth forecast for 2019 to 2.1%, down from 2.3% in December. There was more bad news on Friday, as the spread between 3-month and 10-year Treasury notes turned negative for the first time since 2007, pointing to an inverted yield curve. All eyes will be on U.S. Final GDP, which will be released on Thursday. If GDP is weaker than expected, investors could lose their risk apetite and the Canadian dollar could lose ground.
