USD/CAD Bounces After Canadian Government Increases Deficit Forecasts
USD/CAD has turned pretty bearish this month, but it bumped after Canadian Government revised deficit forecasts
Skerdian Meta•Monday, December 16, 2019•1 min read
[[USD/CAD]] has been trading on a bearish trend since the beginning of this month. It had two reasons to do so; first, it turned bearish after the US ISM manufacturing report showed further contraction in this sector which turned the USD bearish and second, OPEC+ decided to cut production quotas again, by 50 barrels/day this time, which turned the CAD bullish.
Although, we are seeing a 40 pip bounce now, after seeing deficit revisions from the Canadian government. Below are some of the main figures:
Canada boosts deficit forecasts
- Sees 2020-21 deficit of C$28.1B from $19.7B in March
- Sees 2019-2020 deficit of $26.6B from $19.8B
- Sees 31% deficit-to-GDP in 2019-2020 falling to 29.1% by 2024-25
- Update shows slightly better revenues in 2019 and 2020
Finance Minister Bill Morneau said the rise in the deficit is because of a pension accounting issue. That’s not necessarily nefarious. The Federal government and the provinces have been struggling with accounting rules around pensions and obligations. So, this doesn’t seem like a serious thing, and I expect a reversal soon, unless the USD becomes really attractive soon for whatever reason,which is not very likely.
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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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