Canadian dollar forecasts turn stronger as BoC signals earlier hikes

3 weeks ago 51
  • <a href="reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/fx-polls?RIC=CAD= canvass data"></a>

TORONTO, Nov 3 (Reuters) - The Canadian dollar, this year's top-performing G10 currency, is expected to fortify further implicit the coming 12 months, supported by higher lipid prices and the Bank of Canada's caller displacement to a much hawkish stance.

The median forecast of 36 strategists successful a Reuters canvass taken betwixt Oct. 29 and Nov. 2 was for the Canadian dollar to beryllium astatine 1.24 per U.S. dollar, oregon 80.65 U.S. cents successful 3 months, astir its existent level, compared with 1.25 successful past month's poll.

It was past expected to fortify 1.6% to 1.22 successful a year's time. In October, the forecast was for 1.23.

The loonie has gained 2.6% truthful acold successful 2021. In June, it touched a six-year precocious adjacent 1.20.

That's a level that could beryllium revisited should the Bank of Canada statesman "a comparatively assertive tightening cycle," said Shaun Osborne, main currency strategist astatine Scotiabank.

The Bank of Canada past week became the archetypal cardinal slope from a G7 state to exit quantitative easing and signaled it could statesman raising involvement rates successful April, 3 months earlier than antecedently thought.

Money markets expect lift-off arsenic soon arsenic March and astir 125 ground points of tightening successful full adjacent year, portion the spread betwixt Canadian and U.S. 2-year yields has climbed to arsenic precocious arsenic 60 ground points successful favour of the Canadian enslaved successful caller days, the biggest spread successful 7 years.

Canadian employment information for October are owed connected Friday, which could connection further clues connected the outlook for rates.

"Higher lipid prices and favorable involvement complaint spreads person helped the loonie recently," said Hendrix Vachon, a elder economist astatine Desjardins. "According to humanities relations, it inactive has immoderate country near for further appreciation."

In 2014, erstwhile lipid , 1 of Canada's large exports, was past trading supra $80 a barrel, the Canadian dollar was astatine astir 1.13.

The Federal Reserve could springiness the U.S. dollar a boost by starting to taper its bond-buying programme and moving person to complaint hikes, but analysts expect the loonie to cope.

"Decent maturation successful Canada, higher involvement rates than overmuch of the remainder of the G10, and steadfast commodity prices," are supportive of the currency, Scotiabank's Osborne said.

Reporting by Fergal Smith; Additional polling by Sarupya Ganguly, Arsh Mogre and Vijayalakshmi Srinivasan successful Bengaluru; Editing by David Holmes

Our Standards: The Thomson Reuters Trust Principles.

Read Entire Article