The Canadian dollar is weakening on Tuesday after the International Monetary Fund (IMF) published a bearish report on the Canadian economy. The loonie endured additional pressure on tumbling energy prices, which is never good news for a country whose main export is crude oil.
On Tuesday, the IMF slashed its growth estimate for Canada, projecting that the gross domestic product (GDP) will expand just 1.5% in 2019. This is down from 1.9% in the agencyâs previous estimate in January. The IMF does anticipate the national economy will rebound next year to a growth rate of 1.9%.
The international body also cut its global forecasts. It projects that global growth will come in at 3.3% in 2019, down from 3.5%, and 3.6% in 2020. The IMF cited uncertainties in the short-term, primarily from the new USMCA that has yet to be ratified. However, the financial agency believes there is âmodest long-term potentialâ for the international economy.
While 2019 started out on a weak footing, a pickup is expected in the second half of the year. This pickup is supported by significant policy accommodation by major economies, made possible by the absence of inflationary pressures despite closing output gaps.
This report comes a day after Statistics Canada reported that the Canadian labor market lost 7,200 jobs in March, compared to the median estimate of a gain of 1,000 jobs. The unemployment rate held steady at 5.8% and average hourly wages jumped 2.3%.
Energy futures are in the red on Tuesday. May West Texas Intermediate (WTI) crude oil futures fell $0.48, or 0.75%, to $63.95 per barrel. May natural gas futures dipped $0.015, or 0.55%, to $2.69 per million British thermal units (btu). Crude remains one of Canadaâs largest exports, and its natural gas sector has the opportunity to balloon.
The USD/CAD currency pair rose 0.05% to 1.3323, from an opening of 1.3315, at 17:13 GMT on Tuesday. The EUR/CAD advanced 0.14% to 1.5016, from an opening of 1.5016.
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