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New Forecast Says Canadian Dollar to Stay Below 90 Cents Through End of 2015

H.S. Borji
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New Forecast Says Canadian Dollar to Stay Below 90 Cents Through End of 2015

The Canadian dollar will trade below 90 US cents through the end of 2015, a recent forecast from the Bank of Nova Scotia revealed today.

The Bank of Nova Scotia expects the loonie to sink as low as 86 US cents by the end of next quarter before closing out the year at the 89 cent mark. By the end of 2015, Canada’s currency will be at 88 cents.

The embattled loonie has lost around 9 percent over the past 12 months, as waning exports and domestic uncertainty have weighed on the Canadian economy, which has failed to generate meaningful job growth since August. Canadian unemployment unexpectedly declined in February, as job cuts in the public sector offset gains in the private sector.

Despite the Bank of Nova Scotia’s forecast, the Canadian dollar was trading higher Thursday. The loonie was up nearly 0.4 percent to 0.9043 US. The benchmark USDCAD pair, which has declined for four consecutive days, was at 1.1057.

Forex traders sizing the Canadian dollar should take the latest forecast with a grain of salt. A recent estimate from the Canadian Imperial Bank of Commerce (CIBC) said the loonie should rise to almost 93 cents by the end of the year. The Canadian government made a similar forecast in its latest budget, when it said the loonie should rise to 95 cents by the end of 2015.

Forex traders expecting the weaker loonie to boost Canada’s struggling export sector may have to wait longer. Earlier this month Bank of Canada Governor Stephen Poloz said he didn’t see much evidence the weaker loonie was spearheading a stronger export recovery.

“To date, I’ve not seen anything that suggests we’ve actually had a reaction to that,” Poloz said in a news conference earlier this month. “It’s not expected to be the big thing that causes our trade performance to change. I think the big thing is the US. recovery.”

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