Statement from Trudeau
Canadian Prime Minister Justin Trudeay says he's self-isolating because his wife is sick and they're awaiting testing on COVID-19.
"The doctor's advice to the Prime Minister is to continue daily activities while self-monitoring, given he is exhibiting no symptoms himself. However, out of an abundance of caution, the Prime Minister is opting to self-isolate and work from home until receiving Sophie's results," read the statement.
"The Prime Minister will spend the day in briefings, phone calls, and virtual meetings from home, including speaking with other world leaders and joining the special COVID-19 cabinet committee discussion."
I see that more as a reason to worry about the virus than a reason to sell the loonie. However there are plenty of reasons to sell CAD.
The Canadian dollar fell to the lowest since 2016 today, touching 0.7219 (1.3881) and it's now fallen for eight straight days. We're at the tipping point for a much deeper fall.
Canada is undoubtedly headed towards a recession and there are major risks that could undermine the base case of a quick bounce back. A sudden stop in the economy like coronavirus creates major black swan risks, we're seeing that in oil. No one knows where the risks are hidden but there is certainly the chance of a knock-on from oil. There is talk about the US halting oil imports. Would they halt from Canada too? Then there are a host of banking risks. Those are always hidden until they blow up. Finally, how many Canadians will run into hardship if they miss even a few paycheques? Canada waiving waiting periods for employment benefits is a start but Canada immediately needs the things we saw yesterday from the UK and Trudeau out of the picture isn't going to move that along any quicker. The budget is March 30 but they need to move that up asap.
Even if Canada does its absolute best, the loonie is a price-taker for global growth. This is going to be a severe hit and that's not priced in right now. We're right at the tipping point with all old lows now giving way. I think we're on the way to the 2016 lows.
