The Canadian Dollar took a dive after remarks by incoming US Commerce Secretary Wilbur Ross during confirmation hearings.
During his hearing, Ross said reopening NAFTA quickly is a priority for the incoming Trump administration.
Both the Canadian Dollar and Mexican Peso fell on those remarks. Canada’s currency declined to $1.32 USD.
Also impacting the loonie were comments made by Bank of Canada Governor Stephen Poloz during a press conference.
While discussing the decision to maintain interest rates at 0.5%, Poloz hinted at future potential rate cuts if the US engages in protectionist trade measures that end up hitting Canada.
“Should any of those downside risks materialize and put our inflation target at risk then we would have the room to maneuver,” said Poloz. “Yes, a rate cut remains on the table and it would remain on the table as long as those downside risks were still present.”
Due to our dependence on the US economy, and the combination of growing consumer debt and stagnant wages, we face a perilous financial situation in Canada.
That’s why Canada must take steps to increase domestic demand, through a combination of tax cuts (cancelling the carbon tax), infrastructure investment, reducing inter-provincial trade barriers, and reduced regulations. Those actions would increase consumption and build a stronger domestic economy, helping us manage any potential slowdown in economic activity with the United States.
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