Canada’s dollar will rally this year, but much of the upswing will have to wait until a period of uncertainty passes for the domestic and global economies following aggressive tightening by central banks in 2022, a Reuters poll forecast.
The loonie will edge 0.6% higher to 1.35 per U.S. dollar, or 74.07 U.S. cents, in three months, according to the median forecast of currency analysts. That matches December’s forecast.
It was then expected to strengthen to 1.30 in a year, which is a gain of 4.5%. In 2022, the loonie weakened 6.8%, its first decline since 2018.
“We expect to see some mild CAD weakness in the first half of 2023 … as last year’s rate hikes work their way through the economy and lead to a mild recession,” said George Davis, chief technical strategist at RBC Capital Markets.
The Bank of Canada, along with the Federal Reserve and most other major central banks, has raised interest rates at a rapid pace to tackle soaring inflation.
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