Reuters Poll Shows Loonie Rising But NAFTA a Question Mark

Canada’s dollar will rise over the coming year as the Bank of Canada hikes interest rates and higher oil prices become more supportive of the currency, a Reuters poll showed, but it will take a NAFTA trade pact deal to trigger more optimistic gains.

The poll of more than 40 foreign exchange strategists predicted the Canadian dollar, which has been pressured this week by a diplomatic dispute between Saudi Arabia and Canada, will edge higher to C$1.30 to the greenback, or 76.92 U.S. cents, in three months, from C$1.3023 on Wednesday.


usdcad Canadian dollar graph, August 9, 2018

The currency is expected to climb further to C$1.26 in a year, matching the forecast of the July poll.

“The core of the loonie outlook for us is that Canada has one of the very few central banks, arguably the only central bank, that is on a hiking cycle that is broadly comparable to what the Federal Reserve is doing,” said Ranko Berich, head of market analysis at Monex Canada and Monex Europe.

The Bank of Canada, which expects the rate of the country’s economic growth to accelerate to 2.8 percent in the second quarter, has raised interest rates twice since January to match the pace of the Federal Reserve this year.

Money markets expect the Bank of Canada to hike once more by December. Its benchmark interest rate is 1.75 percent.

via Kitco

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza