The Canadian dollar touched an 11-week low Monday amid uncertainty over the timing of a federal election. The dollar was little changed by Finance Minister Ralph Goodale's economic update.
Mr. Goodale unveiled $39-billion in tax cuts and spending Monday in a mini-budget whose life expectancy could be measured in days as opposition parties threaten to force an election within a week.
The document also includes a heavy emphasis on reducing Canadians' anxiety about their economic future by investing billions in post-secondary education and work training programs while making cuts to corporate taxes.
The loonie was little changed at 83.84 after earlier dropping to 83.61 cents — its lowest level since the end of August — from Friday's close of 84.09 cents.
“They have lots of money,” said Jeff Rubin, chief economist and strategist at CIBC World Markets. Mr. Rubin did not expect the government's statement to have any affect on financial markets.
The move came as the prospect of a holiday election campaign loomed after Opposition demands this weekend that the Liberal minority government either agree to an election early in the new year or face a confidence vote in the House of Commons within weeks. The Liberals have rejected calling an early election.
“As of last week, the market hadn't really priced in the political instability in Canada,” said David Powell, a currency analyst at IDEAglobal in New York. “Now it is much clearer that we'll likely see a vote of non-confidence on Nov. 24, which does mean political instability.”
He sees the loonie weakening to about 83.30 cents in the short term, although he expects it will strengthen again to about 87 cents by next June, boosted by robust economic activity.
With files from reporter Terry Weber.