We expect oil to be the key driver for the loonie

Given our latest forecast for oil prices, we now expect the Canadian dollar to rise further in 2021 than we previously thought, but to drop back a bit in 2022.Despite already rising more than 15% against the US dollar from the last year’s low, we think the outlook for the Canadian dollar remains bright for the rest of 2021. For…
Jonathan Petersen Markets Economist
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FX Markets Weekly Wrap

US dollar edges lower ahead of next round of CB meetings

With a couple of exceptions, currency markets have had a quiet week; the US dollar is ending the week a touch weaker against most other currencies, but in aggregate it remains close to its strongest level for the year. With US bond yields continuing to rise and expectations for Fed rate hikes in the second half of next year solidifying, we think the dollar will remain strong over the coming months. The upcoming week kicks off the next round of central bank policy announcements, with the ECB and the BoJ (neither of which we think will alter their policy settings), as well as the Bank of Canada, (which we expect to signal the end of its balance sheet expansion). To the extent that next week reinforces the widely held view (which we share) that the ECB and BoJ will remain well behind other central banks in normalising policy, it may add to downward pressure on the yen and euro.

22 October 2021

FX Markets Update

Most signs point to further trouble for the Turkish lira

We expect the Turkish lira to remain among the worst-performing currencies over the next two years, as political pressures, high inflation, and a vulnerable external position continue to weigh on the currency.

22 October 2021

FX Markets Weekly Wrap

US dollar falls back as Treasury yields edge down

The US dollar seems set to end the week lower against most currencies, as “risky” assets have rallied and US Treasury yields have edged down a bit. This fall back in the dollar and US yields is somewhat surprising in light of the stronger-than-expected inflation data released Wednesday. But we think those data add to evidence that inflationary pressures in the US remain strong, and will gradually push Treasury yields, and the dollar, higher. And while this week’s rebound in risky assets suggests that concerns about the global economic recovery are fading, the latest activity data from China and the US (due on Monday) are likely to set the tone for FX markets next week.

15 October 2021

More from Jonathan Petersen

Capital Daily

Making sense of the mixed signals behind US dollar strength

The US dollar has strengthened against most currencies, despite the fall in the yield of 10-year US Treasuries. We think that the greenback will appreciate further, aided by a rise in long-term Treasury yields.

1 July 2021

FX Markets Weekly Wrap

US ISM and payrolls could add fuel to the dollar rally

The US dollar seems set to end the week slightly weaker, but has held much of its gains following last Wednesday’s FOMC announcement. With increasing focus on the prospects for monetary tightening globally, next week’s employment and survey data in the US may push the dollar higher, if they back up the Fed’s optimistic assessment of the economic outlook.

25 June 2021

FX Markets Update

We think that the yen will weaken further before long

We expect the yen will continue to depreciate against the US dollar this year as 10-year US Treasury yields resume their rise.

18 June 2021
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