"We are doing this without raising taxes, we are doing it without cutting transfers to hospitals, to social services, to education in the provinces, unlike the previous government."
- Jim Flaherty, Finance Minister
Until Friday the loonie is likely to remain relatively calm, and the only driving factor will be growing concerns over emerging markets' currencies. Hence, the Canadian Dollar moved closer to its recent lows against its American counterpart, with the pair hitting 1.1125. Meanwhile, traders are focusing on Friday's GDP report, which can not only show a slowdown from a month earlier in November, but also can surprise markets to the downside, keeping in mind latest economic performance. Therefore, USD/CAD has a potential to reach this month's high at 1.1173.
At the same time, Canadian government made an attempt to calm down markets by saying the land of the maple leaf will post a budget surplus of just under $4 billion in the fiscal year starting April 2015. The budget will be released on February 11. While Finance Minister Jim Flaherty has no doubts the budget will be balanced and he also pointed out policymakers are not attempting to quicken the depreciation of the domestic currency. Flaherty also pledged to delay any of the tax cuts and benefits until there is a surplus.
Regarding the strength of Canada's largest trading partner's currency– the U.S. Dollar, Flaherty welcomed its appreciation, saying further price disparity will affect cross-border shopping.
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