The Canadian dollar has recorded slight gains in the Monday session. Currently, USD/CAD is trading at 1.2663, up 0.22% on the day. On the release front, it’s a quiet start to the week. There are no Canadian releases on the schedule. The US releases New Home Sales, which is expected to jump to 655 thousand. On Tuesday, Canada releases the annual budget. The US will release durable goods and consumer confidence reports. As well, Federal Chair Jerome Powell will testify before the House Financial Services Committee.
Canada releases its annual budget on Tuesday. In October, the Trudeau government revised downwards the deficit for the 2017-2018 fiscal year to C$19.9 billion. The Canadian economy was steady in the fourth quarter, so the deficit could be even lower. The budget is not expected to show any major spending, so it’s likely that the release will not shake up the Canadian dollar. The Canadian currency lost ground last week, and touched its lowest level since late December.
Jerome Powell took over from Janet Yellen earlier this month, and will be on center stage this week, when he testifies before the House of Representatives and the Senate. After the recent stock markets volatility, Powell may opt to play it safe and keep away from any splashy headlines, which could lead to more fluctuation in the markets. Powell could choose to focus on the strong US economy and the Fed trimming its balance sheet, and steer away from a discussion of accelerating rate policy in order to head off higher inflation.
