The Canadian dollar is expected to recover relative to the US Dollar later on in the year as the world’s economic outlook increasingly appears favorable for the more commodity-correlated currencies and many professionals assume monetary authorities will return to lowering interest rates again by 2024, according to a Reuters poll released this past Wednesday.
Although, over the next 12 weeks, CAD is likely not to move over dramatically at 1.34 per U.S. dollar, or 74.63 U.S. cents, according to the median forecast from monetary analysts, however, this was above the January’s forecast of 1.35.
CAD was then expected to increase up to as much as 1.30 in a 12 month period, a gain of just over 3%, but unchanged from the January poll forecast.
The rapid reopening of the China’s massive economy is likely to significantly grow demand for basic commodities produced in excess by Canada, likelyhelping to avoid a recession assuming it does not also have an effect on Canada’s inflation and spur further interest rate hikes in the short or medium term.
“China is one of the big fundamental drivers for why there is growing optimism … With that demand coming back, it’s going to be supportive of the global economy and it could be a boost to pro-cyclical currencies,” said Jay Zhao-Murray, market analyst at Monex Canada Inc.