According to a poll, the CAD should perform worse than a Sep. forecast for the coming year. Anticipations are following big losses in recent weeks as the Bank of Canada’s interest rate increases threatens to plunge the domestic economy into recession.
Since the beginning of 2022, the euro has lost about 7% versus the dollar. However, it has outperformed all other G10 currencies save for the Swiss franc, even if most of that loss has happened since mid-August. It dropped to 1.3838 US dollars, or 72.26 US cents, on Friday, marking its lowest level over two years.
Experts Predict Likely Outcomes
George Davis, a chief technical strategist at RBC, predicts that Capital Markets Canadian dollar will still have some obstacles heading into late 2022 and early 2023 because BoC rate hikes are anticipated to result in a mild recession in the upcoming quarters.
To combat inflation, the Bank of Canada has raised interest rates by 300 bps to 3.25% since March, the highest rate in 14 years. It asserts that sluggish development won’t lead to the economy’s collapse. Analysts predicted that the CAD would increase by 1.6% to 1.34 U.S. dollars in three months from their September forecast of 1.30.
The forecast was for it to rise to 1.30 in a year. In the prior month’s poll, the exact estimate was 1.25. Oil, which has increased in value this week due to OPEC+’s decision to execute the most extreme production reductions since the COVID crisis, is one of several commodities that Canada is a big producer of. But whether there are more fuel price rises depends on whether the Federal Reserve continues to raise interest rates aggressively.
Christian Lawrence, senior multi-asset strategist at Rabobank, explained that he thinks if we see more uncertainty around global economic growth, we could see speculators lower oil prices.