The Canadian dollar has started the week quietly. Early in the North American session, USD/CAD is trading at 1.3321, down 0.12% on the day. On the release front, it’s a light day for fundamentals, so traders can expected an uneventful day from the pair. Canadian foreign securities purchases sparkled, with a reading of C$28.40 billion, well above the forecast of C$15.03 billion. This was the strongest gain in almost two years. The U.S. will release a minor housing report. On Tuesday, Canada releases its annual budget.
Is the Canadian economy heading into a recession? Despite some strong employment numbers, there are worrying signs. The economy recorded a weak 0.4% gain in Q4 on an annualized basis and has been listless early in 2019. David Wolf, a former senior official at BoC, has projected that the Canadian dollar could sink to its record low of 1.60 ($.62 cents U.S.). Weak oil prices and the global trade war have hurt the Canadian economy and dampened the critical export sector.
With the U.S-China trade war showing signs of easing, there were expectations that President Trump and Chinese President Xi might hold a summit in late March. However, it was reported last week that the two leaders will not meet before April. President Trump has said that there will be news in the next 3-4 weeks, which has raised hopes that China and the U.S. will hammer out an agreement. If there are positive developments in the trade war, risk appetite will likely climb, which would be good news for the Canadian dollar.