C$ to weaken on low oil prices and low rates for longer: Reuters poll
By Anu Bararia
(Reuters) - The retreating Canadian dollar is not likely to get much of a reprieve as it closes out its worst year since the financial crisis, with weak oil prices and low interest rates expected to add pressure on the currency, a Reuters poll found.
The plunge in crude prices, two interest rate cuts from the Bank of Canada and a brief recession in the first half of 2015 have all battered the Canadian dollar this year.
While oil prices are expected to remain volatile well into next year, an anticipated U.S. Federal Reserve rate hike in December will probably weigh on the loonie, benefiting the greenback.
"The view is very U.S. dollar-centric," said Scotiabank chief currency strategist Shaun Osborne. "We still expect policy and growth divergence to be (a) primary driver of U.S. dollar strength over the course of 2016.
"Alongside that, we have oil prices, which (are) clearly important for Canada, staying relatively low."
The Canadian dollar is expected to trade at C$1.32 in a month, weaker than Wednesday's close of C$1.31 against the greenback, according to a Reuters poll of almost 50 currency strategists whose forecasts ranged from C$1.25 to C$1.38.
The poll showed the loonie weakening further to C$1.33 in three months and C$1.34 in six months. However, the forecasts are a slight upgrade from October's poll, which pegged the currency at C$1.34 in three months and in six months.
From there, the loonie will probably rise modestly to C$1.33 in 12 months, although that is weaker than the C$1.32 predicted in the previous poll. Forecasts in the poll ranged from a drop of 20 percent to a gain of 10 percent. Continued...