Don’t expect big changes in the value of the Canadian dollar over the next month, says Shaun Osborne, a currency expert with TD Securities in Toronto.
The loonie should stick in the 96- to 99-cent range (US) over the next two to four weeks, said Osborne.
Europe and its ongoing debt concerns will continue to be the big driver, Osborne said. Traders are anxious to see if Greece can reach a compromise with private creditors, while hoping the European Central Bank can boost the euro-zone monetary system, he said. Progress on those two fronts would add some positive sentiment towards the Canadian currency, he said, while a Greek default would have a negative effect.
Europe’s debt woes are in contrast to positive economic data from the U.S. over the past month, which has some experts thinking the world’s biggest economy could be on the verge of recovery. The upward trend in jobs and manufacturing data in the U.S. has provided some additional support towards the Canadian dollar, said Osborne, adding he expects the American economy to soften slightly early in the year, similar to what it did in early 2011.
Upward trends in commodities, including crude oil prices, would also support the Canadian dollar, he said. However, once crude oil prices go above US$100 a barrel, there is less of a correlation between crude oil and the Canadian dollar, he said.
Osborne said there is nothing currently in the short term that is going to move the Canadian dollar towards parity, he said.