The loonie is tumbling this morning after Bank of Canada Governor Stephen Poloz, speaking at a press conference in Ottawa, said if downside risks materialize then rate cuts remain on the table.

As Bloomberg details:

Higher Canadian bond yields, driven by rising U.S. yields, are not consistent with the country’s economic outlook

“While this reaction is consistent with past correlations, it is at odds with Canada’s macroeconomic situation where there is material excess capacity, unlike the US economy.”

Some Trump policies incorporated into forecast show a boost of GDP by 0.1 percent by 2018.

show a boost of GDP by 0.1 percent by 2018. Excess capacity has boosted risk of missing the inflation target

The elimination of excess capacity in the economy is reliant on fiscal stimulus. Main ingredient however is infrastructure spending, which is not yet evident in economic data.

And the Canadian dollar is losing ground fast...

How long before Trump accuses Canada of currency manipulation?

Additionally the peso is getting pounded after Wilbur Ross comments on border taxes and tariffs...