The Canadian dollar, which had been one of the best-performing G10 currencies in the world this year, fell significantly on Friday.
Driving the news: A slide in oil prices and reduced expectations for a rate hike from the Bank of Canada also hurt the loonie, which is edging towards its lowest level of the year against the U.S. dollar. Canada’s economy grew at its slowest past in 2.5 years in the last quarter of 2018 and some economists say first quarter GDP growth this year will be even weaker.
“While a slowdown was widely expected in the final months of the year due to falling oil prices, it’s a much bleaker picture than anyone anticipated,” Bloomberg notes.
Why it matters: That’s bad news for the global economy and especially bad news for Canadian Prime Minister Justin Trudeau.
The big picture: A downward revision in the Q4 2018 numbers and a negative print on the Q1 2019 numbers would put Canada in a recession. That could mean 2 of the world’s 10 largest economies in a recession, with Canada joining Italy, which fell into recession at the end of 2018.
- Worse, Canada hasn’t hasn’t had a recession without the U.S. economy also contracting since 1951.
For Trudeau, the news couldn’t come at a worse time.
- Canada’s former attorney general and justice minister testified on Wednesday that Trudeau pressured her to drop corruption charges against an engineering company from Trudeau’s hometown.
- Andrew Scheer, the Canadian Conservative leader who hopes to unseat Trudeau in the Oct. 23 election, sent a letter to authorities requesting an investigation into the allegations.
- New Democratic Party Leader Jagmeet Singh, who just won election over a member of Trudeau’s party in British Columbia, also is demanding a public inquiry.
- Trudeau’s Liberals have recently lost their lead in the polls, claiming 33.9% of the vote, below the Conservatives’ 35.8%, Time reports.