TD Bank predicts 75 cents CDN $$ in early 2016.https://www.cbc.ca/news/business/bank-of-canada-will-cut-interest-rate-again-td-bank-predicts-1.2931859
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Bank of Canada will cut interest rate again, TD Bank predicts
TD forecasts oil below $40 a barrel, higher unemployment and another interest rate cut in March
CBC News Posted: Jan 26, 2015 12:36 PM ET Last Updated: Jan 26, 2015 1:24 PM ET
TD Bank has trimmed its outlook for real GDP growth for 2015 to two per cent, down from 2.3 per cent in its latest forecast in December. (Canadian Press)
The Bank of Canada will cut its key interest rate again in March, TD Bank predicts in an update to its 2015 forecast.
Last week, the Bank of Canada cut its target for the overnight lending rate from an already low one per cent to 0.75 per cent, in light of the risk posed to the Canadian economy by slumping oil prices.
Economists had expected to hold the rate at one per cent, where it had been since September 2010, but governor Stephen Poloz said low oil prices were "unambiguously negative" for the Canadian economy as he announced the rate cut.
In an update released Monday, TD forecast that the downward trend will lead the Bank of Canada to cut the overnight rate by another 25 basis points to .5 per cent, before standing pat until the second half of 2016.
TD has also revised its economic outlook because of oil prices, which are trading at about $45 US a barrel. TD predicts they could temporarily drop below $40.
"As a consequence, we have trimmed our outlook for real GDP growth for 2015 to two per cent, down from 2.3 per cent in our latest forecast in December," the report said.
The bank predicts the U.S. benchmark price will average $47 this year and $65 in 2016, down from its December forecast of $68 in 2015 and $80 next year.
$875 in savings at the pumps
TD said that while consumers will get relief at the pumps, averaging a savings of $875 a family in 2015, that will be far outweighed by lower corporate profits and weaker income growth.
"Lower corporate profits will likely lead to a contraction in business investment and weaker employment growth relative to our December forecast," the TD report said.
The unemployment rate will rise to 6.9 per cent by the end of the year, and stand at 6.7 per cent at the end of next year, TD forecasts.
The Canadian dollar also stands to drop further — as low as 75 cents US in early 2016.
Alberta, Saskatchewan and Newfoundland and Labrador will bear the brunt of the downward trend, while Ontario, B.C., Manitoba and Nova Scotia all stand to benefit, the report said.
With files from The Canadian Press
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26 January 2015 - Oil testing the January lows
By Frederick Cheng
US Dollar vs Canadian Dollar
Oil testing the January lows and continued USD strength has the Loonie on the defensive again, currently hovering around 1.2450. With GDP on Friday being the only domestic data for the week USDCAD will be driven by the FOMC meeting and movement in the Oil market. All eyes this week are on the FOMC and markets will be anxious to digest their message and tone due to the surprises we have had from Central Banks over the last few weeks. I do not believe the FOMC will make any changes at this meeting as lower oil and low interest rates more than outweigh the risks of a stronger currency to their economy.
We expect a range today of 1.2380 to 1.2500