The article discusses the potential impact of US President Donald Trump’s policies on the Canadian dollar (loonie). Here are some key points:
- The loonie has been weakening in recent months, and experts predict it may continue to decline.
- A 25% tariff on Canadian goods could lead to a significant drop in the value of the loonie, potentially falling below $1.40 per US dollar.
- Economists are predicting that the Canadian dollar will weaken further over the next year, with some forecasts suggesting it could reach as low as 66 cents US by the end of 2025.
Some experts, such as Karl Schamotta, chief market strategist at Corpay Currency Research, believe that the divergence between interest rates in the US and Canada will be a significant factor in determining the value of the loonie. As the Fed is expected to cut interest rates next month, while the Bank of Canada is predicted to cut rates further, this could lead to a significant increase in the spread between interest rates, making it more expensive for Canadians to borrow money and potentially leading to a weakening of the loonie.
On the other hand, some experts, such as David Rosenberg at Rosenberg Research, believe that the loonie has reached its bottom and will begin to strengthen over time.
In conclusion, while there are various predictions regarding the future value of the Canadian dollar, it is clear that the current economic environment presents challenges for the loonie. The impact of US President Donald Trump’s policies on the Canadian economy remains a significant concern, and any further changes in trade policy could have a substantial effect on the value of the loonie.
The Canadian dollar’s performance will depend on various factors, including:
- Trade policy: Any changes to the US-Canada trade agreement or new tariffs imposed by either country could impact the loonie.
- Interest rates: The divergence between interest rates in the US and Canada is expected to continue, which may lead to a weakening of the Canadian dollar.
- Economic indicators: Stronger-than-expected economic growth in Canada could boost the value of the loonie.
Investors should closely monitor these factors and adjust their portfolios accordingly.
