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It's a mess in Canadian politics right now.
Today the government is going to try to present the Fall Economic Statement. It was supposed to be delivered by finance minister Chrystia Freeland but she pulled out this morning, delivering a hard-hitting resignation letter, partly because of a row with Prime Minister Justin Trudeau about running bigger deficits.
Parliament is currently in session but Trudeau is not there, and there is no representative from the finance department. The media is currently in a six-hour lockout with the document, which will be delivered today by someone, which will detail the financial state of the country.
Trudeau's reputation at home was already in disgrace. He is obviously in some sort of attempt to court Mark Carney as finance minister; and for some reason the former BOC/BOE Governor is considering it, as an election must be called before October and it is hard to believe that it will last even that long.
Surprisingly, the junior coalition partner in the NDP continues to support the Liberals, even though their leader call for Trudeau himself to resign. I can't imagine their political fortunes will improve if the Liberals elect another leader, although there is a popular belief at home that they just want to hang on until they qualify for their pensions in the October.
As for Trudeau himself, the CBC reports that he has no plans to resign, although CTV says that Trudeau “has told the cabinet that he is considering a promotion or resignation” and that he could speak in Parliament later today. It could be a long night in Canada.
Anyway, the Canadian dollar is driving everything. me speak with Reuters about the loonie earlier today and told them.
In many parts of the world, the resignation of the finance minister would be a devastating blow to the currency but the market seems to have fully eased into a period of political uncertainty , and an inevitable change in government. The market may laugh if former Bank of Canada Governor Mark Carney joins the cabinet but it won't change course.
The market is sanguine about changes in Canadian political power but sleeps on the risks surrounding the economy. Housing start numbers were stronger today but it's a long line from sales that were made at a low level, prices are rising and the front end of that pipeline is dry. Interest rates are still not low enough to encourage turnover.
Finally, the strong The US services PMI on Monday highlighted Trump's setback for the US economy and the US dollar which is still in its early stages.
I tend to think that it is all upside down risks for the Canadian dollar here because if an election is called, the outcome is a foregone conclusion.
