From:
http://www.cbc.ca/story/business/national/2006/06/22/loonie-forecast.html
Loonie will fall to 81 cents US next year, RBC forecasts
Last Updated Thu, 22 Jun 2006 11:00:58 EDT
CBC News
The Canadian dollar has been through a big rise of late, but it is projected to slide back to 81 cents US by the second half of 2007, RBC Financial Group said Thursday.
RBC predicts that loonie will slide to 81 cents US by late 2007, but National Bank of Canada forecasts the dollar will average 96.3 cents US for 2007. The dollar, which closed Wednesday at 90.16 cents US, is expected to be down to 85.5 cents US by the end of this year, economists from the bank added.
However, economists at National Bank of Canada released an outlook predicting the opposite for the loonie, which has risen from a low of 62 cents US in early 2002.
National Bank said it expects the Canadian dollar to average 96.3 cents US for 2007.
"With Canadian interest rates increasing more slowly than U.S. rates, some of the momentum in the Canadian dollar will be removed," said RBC chief economist Craig Wright.
He said recent price declines of key commodities for the Canadian economy will help take away some of the loonie's loftiness.
RBC expects the Bank of Canada will raise its key overnight rate which now stands at 4.25 per cent one more time to 4.5 per cent and leave it there for the remainder of the year.
However, the U.S. Federal Reserve is expected to hike interest rates twice more to bring its federal funds rate to 5.5 per cent.
Loonie expected to near parity
Clement Gingnac, the chief economist at National Bank, said Canada's "solid economic fundamentals are the dream of many an industrialized nation," making for an environment that should push the loonie close to parity by the end of 2007.
With the economy running at full capacity and inflation well over the central bank's two-per-cent target, the Bank of Canada is expected to ratchet up its target rate again this summer, Clement said.
Canadian economy seen outgrowing U.S. in 2007
RBC sees Canada's economy growing by 3.3 per cent in 2006 before slowing down to 2.9 per cent in 2007.
The U.S. economy is also expected to grow by 3.3 per cent in 2006, and then slow to 2.7 per cent in the following year.
"Despite inflation concerns and rising interest rates in North America and elsewhere around the world, tight labour markets, rising wages and a diminishing drag from net exports are helping to sustain growth in both Canada and the U.S. this year," said Wright.
"We expect Canada's economic growth to outperform the U.S. due to rising business investment," he said.
http://www.cbc.ca/story/business/national/2006/06/22/loonie-forecast.html
Loonie will fall to 81 cents US next year, RBC forecasts
Last Updated Thu, 22 Jun 2006 11:00:58 EDT
CBC News
The Canadian dollar has been through a big rise of late, but it is projected to slide back to 81 cents US by the second half of 2007, RBC Financial Group said Thursday.
RBC predicts that loonie will slide to 81 cents US by late 2007, but National Bank of Canada forecasts the dollar will average 96.3 cents US for 2007. The dollar, which closed Wednesday at 90.16 cents US, is expected to be down to 85.5 cents US by the end of this year, economists from the bank added.
However, economists at National Bank of Canada released an outlook predicting the opposite for the loonie, which has risen from a low of 62 cents US in early 2002.
National Bank said it expects the Canadian dollar to average 96.3 cents US for 2007.
"With Canadian interest rates increasing more slowly than U.S. rates, some of the momentum in the Canadian dollar will be removed," said RBC chief economist Craig Wright.
He said recent price declines of key commodities for the Canadian economy will help take away some of the loonie's loftiness.
RBC expects the Bank of Canada will raise its key overnight rate which now stands at 4.25 per cent one more time to 4.5 per cent and leave it there for the remainder of the year.
However, the U.S. Federal Reserve is expected to hike interest rates twice more to bring its federal funds rate to 5.5 per cent.
Loonie expected to near parity
Clement Gingnac, the chief economist at National Bank, said Canada's "solid economic fundamentals are the dream of many an industrialized nation," making for an environment that should push the loonie close to parity by the end of 2007.
With the economy running at full capacity and inflation well over the central bank's two-per-cent target, the Bank of Canada is expected to ratchet up its target rate again this summer, Clement said.
Canadian economy seen outgrowing U.S. in 2007
RBC sees Canada's economy growing by 3.3 per cent in 2006 before slowing down to 2.9 per cent in 2007.
The U.S. economy is also expected to grow by 3.3 per cent in 2006, and then slow to 2.7 per cent in the following year.
"Despite inflation concerns and rising interest rates in North America and elsewhere around the world, tight labour markets, rising wages and a diminishing drag from net exports are helping to sustain growth in both Canada and the U.S. this year," said Wright.
"We expect Canada's economic growth to outperform the U.S. due to rising business investment," he said.
