The Canadian federal government budget is set to be released at the top of the hour and it's a risk to the Canadian dollar.
Much of the details have been leaked with some broad indications on the level of spending. Even if the deficits are larger, I don't see it as a problem for the Canadian dollar. The fiscal picture in Canada is solid and it's one of the few countries with a AAA-rating from all three major ratings agencies.
The risks instead are on growth and taxation. In general, spending will rise with some money for dental care and grocery subsidies so I don't have big concerns on the outright growth number. There will be money for green initiatives and mining as well. The issue is on the tax side where a surprise hike in personal or corporate taxes could weigh on the loonie.
There were some rumors of a higher tax rate for high earnings including a 60% marginal rate above $300,000. I don't think those risks are priced into the loonie but if there's a market move on the announcement, that's what it will be.
