Currency experts predict Canadian dollar to erode against global markets

 

A foreign exchange expert made a bearish call for the Canadian dollar on Monday, anticipating the loonie will hover around 70 cents against the U.S. dollar as other currencies strengthen.

Dan Tobon, head of G10 FX Strategy at Citi Research says he doesn’t expect a major collapse in the Canadian dollar, but says a correlation with the U.S. economy, potential for deeper Bank of Canada rate cuts and a removal of positive hedge ratio adjustments will impact it.

Tobon said a soft patch in U.S. labour market data can weigh on the Canadian dollar due to a close relationship between both economies.

He noted that Canadian investors have been buying back Canadian dollars as they hedge their U.S. asset exposure, which has supported the currency and said this flow appears to be running out, removing a key source of support for the loonie.

He said markets are currently pricing only one more cut from the Bank of Canada over the next year but sees scope for more aggressive cuts than expected.

Despite sticky inflation, weakness in other parts of the Canadian economy could lead to deeper rate cuts as inflation normalizes amid the Canada-U.S. trade war.

While some weaknesses against the U.S. dollar is expected, Tobon sees broader Canadian dollar weakness against the European Union’s euro, Japanese yen, and other currencies as a bigger concern. One Canadian dollar is trading at around 0.62 Euros and 107 Japanese Yen.

https://www.bnnbloomberg.ca/business/2025/08/18/canadian-dollar-to-weaken-against-global-markets-currency-expert-predicts/