Trading patterns that suggest the Canadian dollar has fallen too far, too fast to a five-year low against its U.S. peer are no match for Stephen Poloz.
After five days of consecutive declines sent the loonie to C$1.1467, the lowest since July 2009, the currency clawed back some losses yesterday and will settle in a short-term range of C$1.12 to C$1.13, according to the Bank of Montreal. Then it will resume its decline to C$1.15 by year-end as Bank of Canada Governor Poloz continues to stoke the economy with monetary stimulus even as the Federal Reserve moves to normalize policy.
“We see potential for near-term pullback as short-term valuations get overstretched,” Matthew Perrier, director of foreign exchange at Bank of Montreal, said yesterday by phone from Toronto. “The weaker CAD outlook is underpinned by a generally strong U.S. dollar outlook, with the U.S. having finished tapering and focus shifting to the timing of the first rate hike.”
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