Canadian dollar to resume losing streak in months ahead: Reuters poll
By Anu Bararia
(Reuters) - The battered Canadian dollar is expected to weaken even more, tied to the ill fortunes of depressed oil prices and the prospect of another interest rate cut, a Reuters poll showed.
After plunging to its weakest in 13 years in mid-January, toC$1.4689 on Jan. 20, the Canadian dollar, known as the loonie, rebounded more than 5 percent as the central bank kept interest rates on hold and the price of oil, a major Canadian export, rebounded.
But there is little hope that a massive oil supply glut in world markets will be soaked up considering clear evidence of waning demand, particularly from China. That suggests there is more downward pressure on the loonie to come.
"Everything is taking cues from crude prices, and nothing more strongly so than the Canadian dollar," said Adam Cole, head of G10 currency strategy at RBC Capital Markets.
The poll of 45 foreign exchange strategists forecast the currency to weaken to C$1.42 in a month from Tuesday's close of C$1.4051, a downgrade from C$1.39 expected in January's poll.
From there, the loonie will likely recover modestly to C$1.40 in six months and C$1.37 in a year versus C$1.37 and C$1.34 predicted in the previous survey. That is about 30 percent below C$1.067, where it was trading when oil prices plummeted.
Crude oil is down more than 70 percent since mid-2014.
The poll's 12-month forecasts were in a particularly wide range, from a 7 percent drop to a gain of 11 percent. Saxo Bank, the most bearish on the Canadian dollar in the poll, expects C$1.55 in six months and C$1.50 in a year. Continued...