Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Canadian dollar forecasts shift higher as Ottawa pads economic support: Reuters poll

EconomyDec 04, 2020 05:10AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The outlook for the Canadian dollar has improved on expectations the currency will benefit from domestic economic stimulus and the rollout of a COVID-19 vaccine, a Reuters poll showed, with the loonie already gaining in recent months.

Canada's dollar has strengthened 14% against its U.S. counterpart since March, reaching a two-year high on Thursday at 1.2848 per U.S. dollar, or 77.83 U.S. cents.

It is expected to pull back about 1% to 1.30 in one month, before strengthening to 1.2739 in a year, the poll of 30 currency strategists showed. Last month, strategists projected 1.32 in one month and 1.2938 in a year.

"We see several tailwinds for the Canadian dollar," said Stephen Brown, senior Canada economist at Capital Economics. "For a start, we think the consensus is far underestimating the outlook for the Canadian recovery, which we think is poised to outperform many other economies given the much greater policy support provided this year."

On Monday, Canadian Finance Minister Chrystia Freeland forecast the budget deficit hitting an historic C$382 billion ($297 billion) on COVID-19 emergency aid, adding that C$100 billion in stimulus would be rolled out once the virus is under control.

An additional tailwind for the loonie could be higher oil prices, Brown said.

The price of oil, one of Canada's major exports, has soared nearly 30% since the start of November and Wall Street has climbed to a record high on hopes a speedy approval of COVID-19 vaccines would boost global economic growth.

"An improvement in risk appetite will help the loonie rally in 2021 due to the currency's high beta," said Simon Harvey, an FX market analyst at Monex Europe and Monex Canada.

High-beta currencies tend to be more sensitive to changes in risk appetite than the broader market. Canada runs a current account deficit, so it depends on foreign investment, including portfolio flows.

A second wave of the pandemic has led to increasing efforts from Canadian provinces to clamp down on businesses and curb gatherings.

Still, Harvey expects a high savings rate and strong vaccination orders, along with fiscal stimulus, to support economic recovery.

Canada has made deals to buy more vaccine doses per capita than any other nation, and Canadian health authorities could approve Pfizer Inc (NYSE:PFE)'s coronavirus vaccine within the next week, allowing distribution to start in early 2021.

Canada's savings rate has climbed to 14.6% in the third quarter from 2% in the fourth quarter of 2019, which could help boost consumer spending when restrictions ease.

($1 = 1.2875 Canadian dollars)

(For other stories from the Reuters foreign exchange poll:)


Canadian dollar forecasts shift higher as Ottawa pads economic support: Reuters poll

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Daniel John
Daniel John Dec 06, 2020 5:03PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
C$398 billion,That's a lot of debt I hope it doesn't cause a major *******on the loonie.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email