Loonie Set for Moderate Recovery Amid Fading Trade Tensions

Foreign exchange analysts expect Canada's dollar to weaken in the short term before making a moderate recovery if trade tensions between Canada and the US are resolved, according to a Reuters poll.

The median forecast of 32 foreign exchange analysts predicts the Canadian dollar will edge 0.4% lower to 1.39 per U.S. dollar in three months, down from 1.40 in the previous survey.

However, in 12 months, the Canadian currency is expected to strengthen 1.8% to 1.36, compared to a previous forecast of 1.3660.

Nick Rees, head of macro research at Monex Europe, said analysts are bearish on the loonie in the short term but expect trade tensions to fade as domestic data recovers.