C$ seen strengthening in 2013, helped by U.S. recovery : Reuters poll

Wed Feb 6, 2013 10:29am EST
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar is expected to strengthen over the course of 2013, a Reuters poll showed on Wednesday, with forecasters looking past recent dovish central bank comments and focusing on the positive impact of an improving U.S. economy.

The median forecast in the poll of 51 economists and foreign exchange strategists saw the commodity-linked Canadian dollar trading at C$0.99 to the U.S. dollar, or $1.0101, in one and three months.

It is expected to change hands at C$0.98 in six and 12 months. The forecasts were similar to a month-earlier poll.

The currency traded at C$0.9971 early on Wednesday, after recovering from a 2013 low of C$1.0101 late last month.

Analysts said the Canadian dollar should benefit from slow and steady economic recovery in the United States, Canada's main trading partner, while relative monetary policy outlooks globally also favor the currency.

"One of the main things about Canada is that it has a very positive gearing to the U.S. and that is right now the region where we see the biggest growth momentum," said Alvise Marino, a foreign exchange strategist at Credit Suisse in New York, which sees Canada's dollar appreciating to C$0.95 a year from now.

The U.S. economy has slowly recovered from the financial crisis as its housing market finds its feet, with the U.S. Federal Reserve promising to keep buying debt with newly created money until unemployment levels fall significantly.

The Canadian dollar, which had traded at a higher value than the greenback since November, stumbled below parity last month after Canada's central bank surprised investors by saying an interest rate increase is less imminent because of sluggish growth and tame inflation.   Continued...