The Canadian dollar has declined against the greenback this week as the Bank of Canada kept rates on hold at 5%.
Analysts see less upside for the Canadian dollar than previously thought over the coming year as recent data showing a slowdown in the domestic economy brings forward the expected start of Bank of Canada interest rate cuts, a Reuters poll found. The median forecast of 35 foreign exchange analysts surveyed in the Dec. 1-5 poll was for the Canadian dollar to strengthen 0.4% to 1.3533 per U.S. dollar, or 73.89 U.S. cents, in three months, compared with 1.3450 in a November poll. "Our view is the Canadian dollar is going to face a difficult next three months as the data starts to look like the Canadian economy is teetering on the edge of recession if not in a mild recession," said Simon Harvey, head of FX analysis for Monex Europe and Monex Canada.
The Bank of Canada (BoC) is set to release its final interest rate report on 6 December, marking the eighth interest rate announcement this year. The rate is expected to remain at the current level.