2018 was a year of uncertainty for the Canadian dollar and while the close relationship with the United States is a double edged sword of both opportunity and pain, 2019 could very easily be a strong year for the Canadian dollar.
Most of this comes from being so intrinsically linked with the US economy which we expect will grow at or above its trend growth level as well as the knowledge that any upset and disrutption to the North American Free Trade Agreement (NAFTA) has likely come in 2018, although we must wait on a completion of its successor, the United States–Mexico–Canada Agreement (USMCA).
The Bank of Canada is set to start raising interest rates in 2019 alongside drives higher in inflation and while higher oil prices may have been a near-term supporter of the currency – a support that we see re-merging in 2019 – these lower levels that we are seeing currently should help consumption by both Canadian and US consumers.
Market expectations of what will happen to the CAD versus the USD are below alongside the predictions of the 5 most accurate forecasters as measured by Bloomberg.
Source: Bloomberg as at 27/12/18
The full list of our 2019 currency outlooks can be found here.