Currency News: The Loonie Expected To Appreciate By Years End

Currency News

The Canadian Dollar (CAD) also known as the ‘loonie’ is currently trading at a low 0.74 relative to the USD. The dollar is expected to dip further in the short-term, but stabilize in the next 12 months. As oil is one of Canada’s major exporting commodities, the currency has struggled this year with the low prices. Given the recent diplomatic relations crisis for Qatar, oil prices may dip even further in the short term.

currency newsWith a strengthened domestic economy, the Bank of Canada is expected to hike up interest rates. Interesting to note, is the fact the central bank has not raised rates since the year 2010. Although, there’s worry for investors surrounding the economy if the housing bubble pops. With a strengthened economy, the Bank of Canada will tighten monetary policy, offsetting the pressures from expected interest rate hikes from the U.S Federal Reserve.

Recent data has shown Canada’s gross domestic product (GDP) grew 3.7% in the first quarter, after a solid expansion in the second half of 2016. The general consensus is by the end of the year, the Canadian Dollar will start to appreciate. Factors affecting the appreciation will be rebounding oil prices and interest rate hikes in Canada.

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