‘Real momentum’: Currency analyst expects loonie to reach 74 cents U.S. this year

Adam Button, chief currency analyst at Forexlive, shares his analysis of the currency market and his bullish case for the Canadian dollar despite uncertainty.

One currency analyst says he expects the Canadian dollar to reach 74 cents U.S. by the end of the year.

On Monday afternoon, the loonie was trading just shy of that level, reaching 73 cents U.S. Adam Button, a chief currency analyst at Forexlive, said in an interview with BNN Bloomberg Monday that markets are seeing “some weakness in the U.S. dollar”, which is being “reflected back in the Canadian dollar.” Meanwhile, he noted the Canadian economy appears to be holding up amid ongoing trade tensions.

“There’s some real momentum here right now in the Canadian dollar and really a lot of this is selling in the U.S. dollar. The market doesn’t like a lot of what it hears in terms of U.S. economic policy right now. So, we see a lot of the correlations are really breaking down with the U.S. dollar, where we would have seen these risk on, risk off sort of thing we’ve talked about for 15 years,” Button said.

“It’s not unfolding like that anymore in the U.S. dollar. There’s a little bit of a loss of confidence in the U.S. dollar, which was a very, very crowded trade for the last number of years. And it’s really coming undone at the moment as U.S. just goes against the economic orthodoxy.”

On Sunday, U.S. President Donald Trump said he would delay a threatened 50 per cent tariff on goods from the European Union to July 9.

Button said that with all “these deadlines running around there and the Liberation Day tariffs coming back on, and I don’t think you can really buy the U.S. until you get past that. So, you (will likely) see the Canadian dollar drift up through then and, and hopefully to the end of the year”

Amid uncertainty, he added he is worried about a “capex cliff” in both Canada and the United States as companies delay investments while seeking clarity.

“And eventually these investments just don’t get made. Then we start to see the layoffs and the consumer spending fall. I mean, we can’t live in this environment of intense uncertainty, indefinitely,” Button said.

With files from The Associated Press.