The COVID-19 crisis is the catalyst that is at the centre of all financial decisions being made at the moment – from an individual’s personal expenditure plans to small businesses deciding how to cope, and the federal government’s latest policies to the Bank of Canada’s move to cut interest rates again.
This week, there are a few key announcements Canadian market watchers will want to keep an eye on.
GDP Figures Due On Tuesday
On Tuesday, Statistics Canada will release GDP figures for January. These numbers will reflect the state of the economy prior to the coronavirus crisis, which means two things: They will be hugely detached from the current economic reality, but they will also serve as the most accurate measure of the target of where the market needs to return to once the pandemic is wrestled into submission.
Last month, StatsCan reported the rate of economic growth in Canada for the fourth quarter of 2019 slowed to an annualized rate of 0.3%, the worst rate of growth in about four years. The poor performance was attributed primarily to rail strikes and poor weather that resulted in disappointing agricultural harvests.
Aid For Canada’s Oil Patch
The next big government stimulus package will come from Finance Minister Bill Morneau, who is expected to announce an aid package for the country’s oil and natural gas sector. This driver of the Canadian economy, this resource sector has been devastated not only by the effects of the pandemic, but the crushing blow from the continuing feud between Saudi Arabia and Russia that has forced the price of a barrel of oil to its lowest levels in decades.
Early this morning, the price of oil dropped another notch, shedding about 8%. The price dive has been disastrous for Canadian oil producers. The benchmark price of a barrel of crude from Alberta, know as Western Canadian Select has dropped to a never-before-seen low of US$5 a barrel last Friday. To put that in perspective, that is less than the cost of a Big Mac at McDonald’s.
Although Morneau’s announcement is expected this week, there is no exact day or time yet available for when he will unveil the aid plan.
Loonie Continues To Drop
The CAD/USD is losing ground against the U.S. greenback again this morning. It is trading at 70.69 cents at about 8:30 a.m., a level that is below the lows seen in 2016.
The Bank of Canada’s lowering of its key interest rate last week buoyed the loonie for a brief time, before it continued its decline.