Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Canadian dollar seen higher if commodity prices rebound: Reuters poll

EconomyOct 02, 2020 06:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Illustration photo of U.S. and Canada Dollar notes

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar is set to gain more than 2% against its U.S. counterpart in a year as an expected recovery in the global economy from the coronavirus crisis improves the outlook for commodity prices, a Reuters poll showed.

The loonie is expected to strengthen 0.6% to 1.32 per U.S. dollar, or 75.76 U.S. cents, in three months from about 1.3280 on Thursday, the poll of more than 40 currency strategists showed.

It is then expected to climb to 1.30 in one year, matching last month's forecast.

"We expect oil and other commodity prices to rebound, particularly in the second half of 2021," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York. "That should pull CAD higher as well."

Oil (CLc1), one of Canada's major exports, has slumped about 37% since the start of the year to less than $39 a barrel as global economic activity collapsed due to the coronavirus pandemic and lockdown measures. But a separate Reuters poll this week predicts very little upside for the price of crude in the near term.

Next year could be a different story. The Organization for Economic Cooperation and Development projected this month that the world economy would expand by 5% in 2021 after an expected 4.5% contraction this year.

Economists expect Canada's economy to suffer a smaller hit from a resurgence in infections than earlier this year, as provinces strive to avoid broad-based lockdowns and after Canadian Prime Minister Justin Trudeau vowed to double down on pandemic-related spending.

Ottawa has forecast a budget deficit of C$343 billion ($258 billion) for this fiscal year, which at about 16% of GDP is the largest shortfall since World War Two.

Government spending along with record low interest rates set by the Bank of Canada have helped support the economy, including home prices.

They have increased more sharply than expected this year, but are set to rise by less than consumer inflation in 2021 as higher unemployment and lower immigration levels cool down the market, a separate Reuters poll showed.

The Canadian dollar could also benefit from broader weakness in the U.S. dollar (DXY) if the greenback loses some of its fundamental support.

"We expect the USD to soften broadly over the next 12 months, reflecting the compression in (economic) growth differentials and yield spreads," said Shaun Osborne, chief currency strategist at Scotiabank.

Those shifts could "drive investor diversification away from the USD," Osborne said.

($1 = 1.3282 Canadian dollars)

Canadian dollar seen higher if commodity prices rebound: Reuters poll
 

Related Articles

Dollar Edges Lower Ahead of Fed Meeting; Yuan Weakens
Dollar Edges Lower Ahead of Fed Meeting; Yuan Weakens By Investing.com - Sep 21, 2021

By Peter Nurse Investing.com - The dollar edged lower in early European trade Tuesday, slipping from a month high, ahead of the start of this week’s crucial Federal Reserve...

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 Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
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.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
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 Investing.com'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
or
Sign up with Email