TORONTO - The Canadian dollar will strengthen less than previously thought against its U.S. counterpart over the coming year, held back by global trade uncertainty and expected interest rate cuts by the Bank of Canada, a Reuters poll predicted.
The less bullish outlook for the loonie comes as the Bank of Canada faces increased pressure from a weakening global economy to follow the path of global peers, such as the U.S. Federal Reserve, in cutting interest rates. “We expect a faster pace of loosening in Canada than priced into markets, with investors coming round to our view after the bank’s October meeting,” said Stephen Brown, senior Canada economist at Capital Economics.
Canada exports a lot of commodities, including oil. Data on Wednesday showed Canada posted a wider-than-expected trade deficit in July as imports rose and exports declined, a sign that a boost to the domestic economy from trade in the second quarter may not be repeated.
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