The Canadian dollar is set to rise later this year as the global economic outlook turns more favorable for commodity-linked currencies and investors bet central banks will cut interest rates in 2024, according to a Reuters poll
by Canada, potentially helping to avoid a recession as long as it does not also force up inflation and spur further interest rate hikes.are also expected to benefit from China's reopening, according to the broader monthly Reuters foreign exchange poll.last month became the first major central bank to pause its tightening campaign, saying it would take time to assess how well rate increases are working to bring inflation down.
"Central banks are starting to pause, and I think that is going to create a bit more of a supportive environment for cyclical currencies like the loonie, especially in the second half of the year," Zhao-Murray said.laid the groundworkWith the end of tightening in sight, money markets are betting the Fed and the BoC will shift to cutting rates by the end of the year and then ease more forcefully in 2024.
Stocks are likely to benefit later this year from the prospect of "an eventual reflationary dynamic," said Mazen Issa, senior FX strategist at TD Securities in New York.The loonie tends to have a strong positive correlation with equity markets. Reporting by Fergal Smith; Polling by Susobhan Sarkar, Mumal Rathore and Shaloo Shrivastava; Editing by Paul Simao
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