C$ seen weakening as domestic economy struggles: Reuters poll

Wed May 8, 2013 12:46pm EDT
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar is expected to weaken against the greenback in the year ahead, a Reuters poll showed on Wednesday, with some forecasters citing concern about the economy's slow rate of growth compared to that of the United States.

The median forecast in the poll of 51 economists and foreign exchange strategists saw the Canadian dollar trading at C$1.01 to the U.S. dollar in one and six months from now.

The currency is expected to weaken to C$1.015 in three months and extend that to C$1.02 a year from now.

"The domestic part will be a little bit frustrating. We have already seen the slowdown in housing activity, the slowdown in consumer borrowing. We think that will translate through to consumer spending as well," said Mark Chandler, head of Canadian fixed income and currency strategy at Royal Bank of Canada.

The Canadian dollar ended the North American session on Tuesday at C$1.0044 versus the U.S. dollar, or 99.56 U.S. cents.

It has gained some 2 percent in the last two weeks, in part on the back of some better-than-expected domestic data.

But the domestic economy is seen growing at a slower pace than that of its southern neighbor and biggest export market, and has other challenges.

A Reuters poll released last month showed the Canadian economy is expected to grow just 1.6 percent this year and 2.4 percent next year. <ECILT/CA>   Continued...