TORONTO: The Canadian dollar edged lower against its US counterpart on Thursday as investors digested hawkish minutes from the Federal Reserve’s March meeting and awaited the presentation of Canada’s federal budget.

The country’s ruling Liberals will unveil their 2022 budget around 4 p.m. ET (2000 GMT), which Prime Minister Justin Trudeau promised will be “fiscally responsible” after having already pledged billions in new programs and increased military spending.

Additional fiscal spending could add to inflation pressures, with money markets already bracing for a rare 50 basis point interest rate hike from the Bank of Canada next week.

Canada’s dollar will strengthen over the coming year as the BoC potentially hikes interest rates aggressively but gains could be capped by the economy’s dependence on the housing market, a Reuters poll showed.

The Canadian dollar was trading 0.1% lower at 1.2550 to the greenback on Thursday, or 79.68 US cents, after touching its weakest since March 28 at 1.2571.