If you took all the economists in the world and laid them end-to-end, they would reach no conclusion. That couldn’t be more true than the outlook for the Canadian dollar.
Last week, there was a report from CIBC’s economics unit suggesting the Canuck Buck was headed to 15-year lows against its American counterpart, likely below 70 cents. Now we have a report from ScotiaBank saying the exact opposite – that it will likely appreciate to 79- or 80-cents US.
Scotia pins its forecast on structural problems in the American economy. The big government fiscal deficit – approaching one trillion dollars – is one factor weighing on the American currency. Another is that the trade deficit is huge – likely to reach the trillion-dollar range in a few years. And the way to encourage trade is to discount or devalue the currency.
So ScotiaBank, which thought the Canadian dollar would rally last year in comparison to the US dollar, thinks the move is inevitable and could occur this year giving those with plans to head south for a holiday something of a break.