The Canadian dollar should stay strong and level in the coming year, predicts a Toronto-based currency analyst.
The loonie may see a slight rise in the coming weeks before levelling off, says Camilla Sutton, a currency strategist with Scotia Capital.
“While the currency markets have been driven recently by the fiscal cliff situation in the U.S. and there now seems to be a temporary solution in place by the U.S. government, the issue still needs to be fully resolved,” she said. “So I would suggest that 102 U.S. cents is a very reasonable goal to set for the value of the Canadian dollar.”
But the chances of the currency shooting above its 2012 high of 104 U.S. cents is extremely remote, she added.
The loonie could suffer if Washington fails to deal with its budget deficit woes — which wouldn’t make credit rating agencies happy, Sutton said.
“The risk then becomes the issuance of a negative outlook from any of those agencies,” she said.
“We need to see the U.S. government on a recession-proof track, and if not, then the implications would be some further weakness in the Canadian dollar.”