Loonie will plummet to 85 cents: TD

TORONTO – Watch for the loonie to lose more of its luster this year, according to two well-known bank economists.
Craig Alexander, chief economist for TD Economics, warned Thursday that consumers could see the Canadian dollar slide as low as 85 cents US by mid-year — a level it hasn’t closed below since May 2009 — if the current environment continues.
He said factors that have impacted the currency so far this year, from an increasingly dovish tone from the Bank of Canada to tapering of monetary stimulus by the U.S. Federal Reserve, will continue to drag down the loonie.
“TD Economics expects that the factors which have taken the Canadian dollar lower are unlikely to shift over the next year or so,” wrote Alexander in the report, titled “The Call of the Loonie.”
“Canada’s economy is forecast to underperform the United States, interest rate hikes remain quite a ways off and the outlook for commodity prices is pretty flat, on average.”
The report noted that a strengthening U.S. greenback and Bank of Canada governor Stephen Poloz’s perceived stance on a weakened loonie have led the currency’s fall to a four-year low.
READ MORE

Please share this article