The commodity-linked Canadian dollar weakened against its USA counterpart on Monday after data showed a slowdown in China's economy and the International Monetary Fund cut its world economic growth forecasts.
The IMF said Monday that it expects global growth this year of 3.5 percent, down from 3.7 percent in 2018 and from the 3.7 percent it had forecast for 2019 back in October.
"We therefore believe growth of below 6.5 percent will become the norm from here, and that Beijing is nearly certainly going to accept this new reality and lower the growth target for 2019 to 6-6.5 percent", they said in a research note.
'The global expansion is weakening and at a rate that is somewhat faster than expected, ' the Fund said.
The Euro took a small leg lower after the International Monetary Fund released its latest growth forecasts, and it's not a rosy outlook across the board.
The revised global growth rates are 0.2 and 0.1 percentage point below the IMF's previous projections made three months ago.
Growth in emerging and developing Asia will dip from 6.5 per cent in 2018 to 6.3 per cent in 2019 and 6.4 per cent in 2020, it said. The Sarb now estimates growth in 2018 to have averaged 0.7 percent up from 0.6 percent in November.
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"With momentum past its peak, (and) risks to global growth skewed to the downside. policies urgently need to focus on preventing additional deceleration", the International Monetary Fund urged. However, we believe the risks to more significant downward corrections are rising'.
The lender further said China's growth slowdown could be faster than expected, particularly if trade tension continued, and that could trigger abrupt sell-offs in financial and commodity markets as was the case in 2015/16.
It also kept its China growth forecast at 6.2 percent in both 2019 and 2020, but said economic activity could miss expectations if trade tensions persist, even with state efforts to spur growth by boosting fiscal spending and bank lending.
Another major concern is the potential for a more severe slowdown in China, which would have repercussions throughout Asia.
Washington and Beijing declared a 90-day truce on December 1, but the risk remains that tensions will flare up again in the Spring and "casts a shadow over global economic prospects".
It urged countries "to resolve cooperatively and quickly their trade disagreements" and the resulting policy uncertainty, "rather than raising harmful barriers further and destabilising an already slowing global economy". Metals prices are expected to decrease 7.4 percent year-over-year in 2019 (a deeper decline than anticipated last October), and to remain roughly unchanged in 2020.
The group commented: "As of mid-January, the shape that Brexit will take remains highly uncertain".