Loonie continues to fall on interest rate expectations

The Canadian dollar has fallen for the third straight day against the U.S. dollar, after the Bank of Canada moved Wednesday to lower expectations of an interest rate hike.

The Canadian dollar has fallen for the third straight day against the U.S. dollar, after the Bank of Canada moved Wednesday to lower expectations of an interest rate hike.

The loonie fell one-quarter of a cent to 95.70 cents US in early afternoon trading, a seven-week low, and is down a cent and a half so far this week.

On Wednesday, Bank of Canada governor Stephen Poloz indicated the bank is not expecting to raise rates any time soon, and that a cut to interest rates may be just as likely if economic conditions do not improve.

The bank also lowered its outlook for Canadian growth for the next three years, as Canadian exports have yet to pick up.

Andrew Pyle, senior wealth adviser and portfolio manager at Scotia McLeod, said he believes the loonie could hit 90 cents US by the end of the year.

Pyle noted Poloz's background as the head of Export Development Canada as another sign the bank wants to do what it can to lower the dollar and boost exports.

"I would bet right now that the Bank of Canada would like a little bit of juice from the currency, whether it's a two- to five-cent decline back towards 90 cents to get the export sector going and to get the economy going," Pyle said in an interview on CBC's Lang & O'Leary Exchange.

Other economists also see the dollar falling, but not as quickly. In a note, Capital Economics says it sees the Canadian dollar falling to 92 cents by the end of June next year.

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.