USD/CAD Bounces After Canadian Government Increases Deficit Forecasts

[[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.
Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
ABOUT THE AUTHOR See More
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.
Related Articles
Comments
0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments