According to experts, the American dollars will struggle in the coming months as it appears to be continuing its downward trend. ” We do have more space to fall”, said Karl Schamotta, chief market strategist at Corpay. In recent weeks, the Canadian dollar has been trading for almost 4 % less than it was in September, falling below 70 cents US. According to Sabotta, the upcoming month may be” a very tumultuous period for Canada” as uncertainty posed by approaching U.S. president Donald Trump’s policy proposals weighs on consumer confidence and business investment, which means a weaker dollar in the near future. But, that’s not the only factor at play. The beating U. S. business, which is pushing U. S. produces higher — well above produces in Canada — is attracting more opportunities south of the border. There’s also a widening divergent in economic policy between the Bank of Canada and the U. S. Federal Reserve, Schamotta said. That implies that international buyers find the American money to be much less appealing, Schamotta said. 1: 37
How American finances could be impacted by a rate cut of a quarter-percentage point below the US dollar last month. It is now expected to reduce the rate cuts from the previous four cuts to two. In addition, this month, the Bank of Canada announced its next immediately enormous interest rate cut, bringing its important rate rate to a 3.25 per cent reduction. The kills of price cuts, according to Adam Button, general currency analyst for Forexlive, come as the American market has continued to stretch on a per-capita basis. Also, he added:” In 2025, the state is forecasting negative population growth. The single factor in American economic growth over the past two years has been population growth, and that trend is about to change.” Schamotta predicts a further decline in the first few months of the year and a steady, moderate improvement in the loonie through the remainder of 2025. He claimed that the Bank of Canada’s price cuts will ultimately cause activity in both the Canadian housing market and American consumers. He said,” That should help to support the Canadian dollar a little bit toward the end of the year.” But as Trump’s tax challenges loom, Schamotta said investors are in a” sell-first-and-ask-questions-later mode”. ” They’re not going to rush around to see … and that’s going to put upward pressure on the loonie”, he said. ” The big problem here is the next several decades, waiting to see what Donald Trump does”, he said. Trending Then
Bank of Canada’s major rate reduce was a ‘ near call,’ minutes present
Greenland rebuffs Trump, says country is’ not for sale ‘
Button noted the loonie’s story is really about what’s happening south of the border. ” A good portion of the’ Canadian dollar weakness’ is U. S. dollar strength”, he said. Investors looking at the global landscape for 2025 “only see one country where we may get impressive growth, and that’s the United States”, he added. 1: 40
Canadians bound for U. S. might have to carry more money as dollar slumpsWhile that’s been the trend for a number of years, Button said, “until the U. S. economy stumbles, I don’t see a real opportunity for the Canadian dollar to right itself”.The Canadian dollar has been historically tightly correlated to oil, due in large part to oil’s outsized impact on the Canadian economy, but that relationship has weakened over the years. He claimed that the oil and gas sector’s investment cycle has ended and that it is not likely to return any time soon. Second, changes in interest rates are more important than changes in ( oil ) exports, which will affect the overall economic performance of Canada. A weak Canadian dollar, according to Button, isn’t as beneficial to the country’s economy as it once was. He made reference to how a lower lonie had previously fueled a revival of the export and manufacturing sectors. ” That’s no longer the case”, he said. ” You don’t have that balance built into the currency like there once was” .&, copy 2024 The Canadian Press
