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Markets

Canadian dollar notches 1-month high ahead of federal budget

  • Canada will present a budget on Monday, at about 4 p.m. (2000 GMT), with billions of dollars for pandemic recovery measures, C$2 billion toward national childcare, and new taxes on luxury goods.
  • This is going to be a serious budget that either sets the stage for post-pandemic policy in Canada, or has all the makings of an election platform, possibly to be used as soon as later this year.
19 Apr, 2021

TORONTO: The Canadian dollar strengthened to a one-month high against its US counterpart on Monday, as the greenback broadly declined and ahead of a federal budget that is expected to spend big amid a fast-rising third wave of COVID-19 infections.

Canada will present a budget on Monday, at about 4 p.m. (2000 GMT), with billions of dollars for pandemic recovery measures, C$2 billion toward national childcare, and new taxes on luxury goods.

"This is going to be a serious budget that either sets the stage for post-pandemic policy in Canada, or has all the makings of an election platform, possibly to be used as soon as later this year," said Robert Kavcic, senior economist at BMO Capital Markets.

Wednesday's Bank of Canada interest rate decision will also be a focus for investors, with strategists expecting the central bank to announce it is cutting bond purchases from the current pace of C$4 billion per week.

The Canadian dollar was trading 0.1% higher at 1.2492 to the greenback, or 80.05 US cents, having touched its strongest intraday level since March 19 at 1.2471.

The price of oil, one of Canada's major exports, eased amid concerns that rising coronavirus infections in India and other countries would dent fuel demand. US crude prices were down 0.3% at $62.97 a barrel.

The US dollar fell to its lowest in nearly seven weeks against a basket of major currencies as the Federal Reserve's view that any spike in inflation was likely to be temporary weighed on Treasury yields.

Canadian government bond yields were mixed across the curve, with the 10-year down less than half a basis point at 1.537%.

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