The Canadian Dollar was the best performing currency in 2019. The CAD finished on a high too, ending the year at 1.299 USD/CAD. The currency had a strong spell of growth against the US Dollar since its Bank of Canada meeting at the beginning of December, signally stable and strong forecasts going into 2020.
Funnily enough, the USD/CAD exchange rate is roughly tracking energy prices since 2014, but negatively correlated. Thus, when oil prices rise, USD/CAD drops (-.32% correlation). Canada is thought to benefit from the (albeit slow) ending of the Donald Trump trade wars, with Canada relying on America for exports.
This strong performance means the CAD forecast 2020 stands in high hopes. Despite slowing global growth, Canada is stoically composed within this. Almost every target inflation rate set by the Bank of Canada, the Canadian economy nails. Real GDP is forecast to grow by 1.8% in 2020, and 1.9% the year after that.
CAD isn’t without its threats, though. There are a few concerns for Canada. Firstly, business investment has been sub-par for a few years consecutively. Secondly, there is a record level of corporate debt embedded in the Canadian economy. This adds more risk on the Candaian economy, which is already considered to be credit-laden. Whilst this may not pose a considerable threat in isolation, in the event of a global/US debt crisis, Canada looks far from protected.
Canadian dollar FX forecast 2020
The CAD FX forecast is actually a hotly debated currency regarding 2020, just like the brexit. Some economists have no reason to believe that the CAD will be anything other than its previous-self — performing strong at the forefront of the incredibly stable Canadian economy. There are other speculators though that believe the CAD is peaking, and is set for a modest fall in 2020.
In fact, analysts at Scotiabank are suggesting that the policy makers at the Bank of Canada are going to try and stifle its rise. They believe the global economy is less of a risk to the CAD than the Bank of Canada is to itself. There are many reasons why Canada may want to prevent its currency from getting too strong — mainly because its service industry-dependent economy may struggle regarding exports if the currency gets too expensive.
CAD vs USD 2020
|Speculator||1 week||1 month||1 quarter|
|Barclay’s||1.3100 Bearish||1.3300 Bullish|
|Colin Cieszynski||1.3300 Bullish||1.3200 Sideways||1.3150 Bearish|
|J.P. Morgan Global FX Strategy||1.3600 Bullish|
|Lloyds TSB||1.3200 Sideways|
|Rabobank Markets Research Team||1.3000 Bearish||1.3300 Bullish|
The above table is the speculation from the sentiment of major authoritative players in the Fx industry. As we can see, there’s a varying of opinions, which sums up CAD’s current state. Technical analysis suggests its imminently heading for great resistance, whilst FX forecasts suggests it’s going to be bearish in the short term, but become bullish by Spring.
Despite such speculation, the CAD is sure to do well in the grand scheme of things. The USD is even more likely to fall according to experts, and the EUR and GBP is likely to suffer because of Brexit. Whilst the global economy is somewhat stagnant and geopolitics is on a knife-edge, Canada remains diplomatically secure in its political and economic handlings, and will not threaten a CAD crash anytime soon.