Where Is the Canadian Dollar Going From Here and Why?
In early May, Global Insight adjusted its forecast for the Canadian dollar upward. This was very much the result of a general downward adjustment in our forecast of the U.S. dollar relative to other major currencies. For example, the average value of the Canadian dollar for 2008 was moved up by 2.2% from 87.1 U.S. cents to 89.7 cents. However, Global Insight’s index of the currencies of the United States’ major trading partners (including Canada) was revised upwards by almost as much, at 1.8%. The forecast for the euro was revised upward by about the same amount as the Canadian dollar. This relative downgrading in the forecast in the U.S. dollar relative to other major currencies was a reflection that globally, growth and interest rate differentials were turning against the United States. Specifically, interest rates in Europe are on the upswing. The forecasted price of WTI oil for 2007 was revised up about 5% in recent months, providing some support from commodity prices for the sligh
