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

Canadian dollar seen higher as BoC tightening cycle comes into view: Reuters poll

ForexAug 05, 2021 08:13AM 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 January 23, 2015. REUTERS/Mark Blinch/File Photo

By Fergal Smith

TORONTO (Reuters) - Forecasts for the Canadian dollar were raised in the latest Reuters poll as analysts expect the Bank of Canada to begin interest rate hikes before the Federal Reserve, alongside a high rate of COVID-19 vaccinations, to support the domestic economy.

The median forecast of more than 30 strategists in an Aug. 2-4 Reuters poll was for the Canadian dollar to strengthen around 2.4% in three months to 1.2250 per U.S. dollar, or 81.63 U.S. cents.

The unit, nicknamed the loonie, was then expected to rise further to 1.21 in a year's time, compared with a forecast of 1.22 in July's poll.

"We look for the loonie to rise a bit over the coming year," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York. "The BoC will likely be beginning to prep markets for its first rate hike at about this time next year, while the Fed will be trailing behind."

Canada's central bank last month cut its weekly net purchases of Canadian government bonds to a target of C$2 billion from C$3 billion and maintained guidance for the first rate hike to come as soon as the second half of 2022.

The Fed's latest guidance for liftoff is 2023.

The Canadian dollar has gained more than 1.5% this year, lagging only the British pound among G10 currencies. In June, the loonie notched a six-year high near 1.20.

Improvement in Canada's current account balance has added to the positive outlook for the loonie, with foreign exchange flows moving more in favor of the currency, Anderson said.

Canada posted its first quarterly current account surplus since 2008 at the start of the year as prices rose for some major exports, including oil.

Oil touched a near seven-year high around $77 a barrel in July but has since been pressured by a more uncertain outlook for demand as the Delta variant of the coronavirus spreads in some major economies, including the United States.

The variant has reached Canada but a high rate of inoculation could reduce the risk of wide-ranging economic restrictions. About 72% of Canada's population has received at least one dose of a vaccine and 60% has been fully vaccinated, a Reuters tally shows.

Canada is "a clear leader on the vaccine front," said Erik Nelson, a currency strategist at Wells Fargo (NYSE:WFC), adding this could raise Canada's growth prospects compared with the United States, boosting the Canadian dollar.

(Reporting and polling by Fergal Smith; Editing by David Holmes)

Canadian dollar seen higher as BoC tightening cycle comes into view: 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.
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