Canadian dollar's advance likely to fizzle out

The Canadian dollar's recent advance is likely to fizzle out as it becomes clearer to the market that Canada's economy is actually losing momentum. We expect lower commodity prices and a severe housing market downturn to badly constrain economic growth this year and next. Narrowing interest rate differentials will, in turn, put more downward pressure on the Canadian dollar. Accordingly, we still stand by our previous view that the Canadian dollar will end this year around US$0.95.