Canadian dollar expected to strengthen in 2025 as rate cuts boost economy

The Canadian dollar is forecast to extend its recovery against its U.S. counterpart in the coming year as lower borrowing costs bolster economic growth in Canada and increase investor appetite for risk, a Reuters poll found.

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Canada’s loonie has rallied by 3.3% since hitting a near two-year low of 1.3946 per U.S. dollar, or 71.71 U.S. cents, in August.

The median forecast of nearly 40 foreign exchange analysts in the Sept. 30–Oct. 2 poll showed the loonie consolidating those gains in three months, edging 0.1% lower to 1.3514, but remaining stronger than the 1.3650 expected in a September poll.

In a year, the currency was predicted to advance 1.7% to 1.3275, compared to 1.3333 seen previously.

The Bank of Canada is expected to continue reducing its benchmark interest rate over the coming months after cutting it by 75 basis points since June to 4.25%, while the U.S. Federal Reserve began its own easing campaign in September.

This article was written by Ryan Paisey at www.forexlive.com.