Experts say the outlook for the loonie in 2023 largely depends on commodity prices, how the U.S. dollar fares, and whether central banks are successful in avoiding a major recession.
The Canadian dollar recently rose to its highest level in more than two months against the U.S. dollar, which gained strength Friday after a stronger-than-expected jobs report.
However, analysts are predicting some further weakness in the U.S. dollar in 2023.
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In a report early January, Scotiabank said the Canadian dollar’s outlook for the year is highly contingent on external developments, with commodity prices and valuation potential positives for the dollar.
Michael Greenberg, senior vice-president and portfolio manager at Franklin Templeton Investment Solutions says if the economic downturn provoked by central banks’ policies is harsher than expected or hoped for, that would weaken the loonie.
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Meanwhile, he says a soft landing would mean strength for the Canadian dollar.
