C$ seen steady over next year as U.S. economy dictates direction: Reuters poll
By Solarina Ho
TORONTO (Reuters) - The Canadian dollar is forecast to hold near current levels against the greenback in the year ahead, a Reuters poll showed on Wednesday, with the outlook for the U.S. economy and the risk its central bank will curb stimulus seen driving global currency moves.
The median forecast in the poll of 49 economists and foreign exchange strategists saw the Canadian dollar trading at C$1.03 to the U.S. dollar in one, six and 12 months from now. It is expected to trade stronger at C$1.02 in three months.
The Canadian dollar ended the North American session on Tuesday at C$1.0344 versus the U.S. dollar, or 96.67 U.S. cents.
It has weakened off since last month's poll, retreating some three percent since hitting a peak in early May. Robust U.S. economic data, which bolstered the view that the Federal Reserve might rein in its quantitative easing program in the coming months, pushed the Canadian currency to its softest levels in a year.
The latest predictions are weaker than the survey conducted in May, which saw the Canadian dollar trading at C$1.01 in one and six months, at C$1.015 in three months and at C$1.02 in 12 months.
The latest poll had a broad range of views, with a 20 cent spread between the most bullish and bearish views 12 months out. While some strategists agreed on the general economic outlook, they differed on its implications for the currency.
"Most importantly, the expectations on the Federal Reserve potentially tapering QE (quantitative easing) and the implications for the big dollar has been the biggest impact on USD/CAD and also what we had been expecting to be one of the main drivers," said Greg Moore, FX Strategist at TD Securities.
"The big picture over the one-year horizon still remains the same ... The Canadian economy will likely pick up as well, but probably not to the same degree," he added, noting Canadian fundamentals have not deteriorated much. Continued...