There are significant downside risks to the Canadian economy. What is this week’s outlook for the Canadian dollar?
Here is their view, courtesy of eFXdata:
Credit Agricole CIB Research discusses CAD outlook and notes that the currency is particularly vulnerable ahead of the Canadian retail sales and CPI inflation for March and given the still gloomy outlook for oil prices.
“The BoC has recently updated its economic outlook for the Canadian economy and highlighted the unprecedented nature and severity of the current downturn as well as the significant downside risks to inflation prospects from here. The economy will remain buffeted by the combined headwinds of very weak oil prices, slowing global energy demand and subdued domestic demand ravaged by the Covid-19 outbreak,” CACIB notes.
“Next week’s inflation and retail sales data could corroborate the central bank’s dire predictions. Indeed, we expect CPI inflation to decelerate significantly. In addition, domestic demand should weaken considerably in part given the sharp deterioration we saw in the Canadian labour market of late. Next to the domestic economy, the outlook for oil prices will remain a drag for the beleaguered CAD,” CACIB adds.
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