Canadian dollar seen strengthening in 2013 as risks dissipate, rates rise: Reuters poll

Wed Dec 5, 2012 9:37am EST
 

By Solarina Ho

TORONTO (Reuters) - The Canadian dollar will strengthen against its U.S. counterpart over the next year, economists polled by Reuters say, with a recovering global economy and a possible Bank of Canada interest rate increase providing support.

The median forecast in the poll of 53 economists and foreign exchange strategists, released on Wednesday, sees the commodity-linked Canadian dollar trading at C$0.99 to the U.S. dollar, or $1.0101, in one and three months' time.

Over six months, the survey saw the currency strengthening to C$0.98, or $1.0204, and holding at that level a year from now. The Canadian dollar traded at C$0.9919 to the U.S. dollar, or $1.0082, on Wednesday.

"We still expect the global outlook to continue to expand. So some of the downside risks we're currently worried about are going to be hopefully less worrisome as we move forward," said Craig Wright, chief economist at Royal Bank of Canada.

"In that environment, commodity prices should regain a bit more of the ground that they've lost recently and that tends to be positive for the Canadian dollar."

RBC, among the more bullish forecasters, sees Canada's dollar trading around C$0.99 in a month and strengthening to as high as C$0.95 versus the U.S. dollar, or $1.0526, in 12 months.

The median forecasts are similar to those in a poll published a month ago in which the currency was seen trading at C$0.99 in a month, and at C$0.98 in three, six and 12 months.

The currency has weakened about 2.5 percent since the start of the year, but has gained about 3 percent since the 2012 low in September.   Continued...

 
A man holds the new Canadian 100 dollar bill made of polymer in Toronto November 14, 2011. REUTERS/Mark Blinch