Loonie seen stuck near parity in 2012: Reuters poll

Wed Mar 7, 2012 1:22pm EST
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By Claire Sibonney

TORONTO (Reuters) - Global forecasters have hiked their targets for the Canadian dollar from a month ago, but the commodity-linked currency is still expected to trade near parity with the U.S. dollar for much of 2012, a Reuters poll showed.

The currency has hovered in a narrow range near equal value against its U.S. counterpart since late January. It is expected to stay stuck around the one-for-one mark for at least the next six months before firming slightly 12 months from now.

The median forecast in a survey of 51 global foreign exchange strategists released on Wednesday showed the Canadian dollar at exactly $1.00 in one, three and six months from now. In a year, the currency is expected to strengthen slightly to C$0.99 versus the U.S. dollar, or $1.01.

By comparison, February's poll had Canada's dollar trading at C$1.01 to the U.S. dollar, or 99.01 U.S. cents, in one and six months from now, and parity in January 2013.

"We'll obviously have some inter-week, inter-month volatility ... however parity certainly feels like a level where the market is quite comfortable," said Camilla Sutton, chief currency strategist at Scotia Capital.

On Wednesday, the currency slipped to C$1.0010, or 99.90 U.S. cents, as lingering uncertainty about Europe's debt crisis still weighed on riskier assets.

But Sutton said factors working in the Canadian dollar's favor are the country's triple-A debt rating, oil prices over $100 a barrel, and a stable growth outlook for Canada, the United States and China.

The Bank of Canada is also expected to hike interest rates before the U.S. Federal Reserve, according to a recent Reuters poll, though no move is expected until next year.   Continued...

A hologram security feature is seen on the new Canadian 100 dollar bill made of polymer in Toronto November 14, 2011.  REUTERS/Mark Blinch