Canadian Dollar Forecast To Strengthen Through 2018 - Reach 87 Cents US

The Canadian dollar has strengthened steadily in recent months, and that momentum is forecast to continue into 2018, with some analysts predicting that the currency will reach 87 cents U.S. next year.

The Canadian currency has rallied by more than 13% against the U.S. dollar since May of this year and is currently valued at 82 cents U.S. In August, Canada’s dollar proved to be the best performer of all the G10 and G20 currencies. Now, a number of currency traders and analysts are forecasting that Canada’s currency will continue strengthening in the coming months and reach as high as 87 cents U.S. in 2018.

Asked about the dollar’s appreciation, Canada’s Finance Minister, Bill Morneau, told reporters that the rise is “a reflection of the country’s economic strengths.” Indeed, Canada’s economy has been growing at a brisk pace this year with annualized growth in the second quarter of 4.5% - better than most economists had forecast.

The “Loonie,” as Canada’s dollar is known, has also benefitted from strengthening oil prices after the International Energy Agency (IEA) said that the global oil surplus is beginning to shrink due to strong demand as well as an output drop from major producers. Canada is a net exporter of oil and natural gas.

However, a strong Canadian dollar is not being welcomed by everyone north of the border. With the Canadian economy heavily dependent on exports, many economists and business leaders want the Bank of Canada to talk down the currency, or take steps to weaken the dollar in order to keep exports competitive. Yet that doesn’t appear to be likely at this time. In a recent interview, Bank of Canada Governor Stephen Poloz said he is not concerned about a stronger Canadian currency.

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