Canadian dollar will strengthen this year as oil prices boom: poll
Global News
The median forecast in the Reuters poll was for the Canadian dollar to gain around 1.6 per cent to 1.25 per U.S. dollar, or 80 U.S. cents, in three months' time.
Canada’s dollar will strengthen over the coming year as soaring commodity prices boost the domestic economic outlook and the Bank of Canada hikes interest further, but gains for the loonie will be less than previously thought, a Reuters poll showed.
The median forecast in the Reuters poll was for the Canadian dollar to gain around 1.6 per cent to 1.25 per U.S. dollar, or 80 U.S. cents, in three months’ time, compared to 1.2450 in last month’s forecast. It was then expected to climb to 1.23 in a year’s time.
“High commodities, Bank of Canada tightening should give the CAD an edge as we move through the balance of the year,” said Shaun Osborne, chief currency strategist at Scotiabank.
“Even if we see commodity prices drop back from current levels in the longer run, there is still an unrealized terms of trade boost here for the CAD that should get factored in in the next few months.”
Terms of trade is the ratio of export prices to import prices. An improvement makes a country wealthier.
Canada is a major producer of commodities, including oil, which has surged to its highest level since September 2008 on concerns sanctions on Russia after it invaded Ukraine will lead to further tightening of global energy supplies.
“A higher than previously expected base oil price and our expectation of an improvement in the global growth outlook has led us to revise down our USD-CAD forecast,” said Simon Harvey, head of FX analysis for Monex Europe and Monex Canada.
