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Brace yourselves, the loonie is expected to resume its losing streak in the months ahead: poll

Bearish bets on the Canadian dollar rose to their highest in five months last week, according Commodity Futures Trading Commission data.

The battered Canadian dollar is anticipated to weaken much more, associated with the ill fortunes of depressed oil prices and also the prospect of another rate of interest cut, a Reuters poll showed.

Here are Canada’s winners and losers because the loonie nosedives

After plunging to its weakest in 13 years in mid-January, to $1.4689 on Jan. 20, the Canadian dollar rebounded more than five percent because the central bank kept rates of interest on hold and also the price of oil, a major Canadian export, rebounded.

But there is little change hope that a massive oil supply glut in world markets is going to be soaked up considering clear evidence of waning demand, particularly from China. That suggests there’s more downward pressure on the loonie to come.

“Things are taking cues from crude prices, and nothing more strongly so compared to Canadian dollar,” said Adam Cole, head of G10 currency strategy at RBC Capital Markets.

The poll of 45 foreign exchange strategists forecast the currency to weaken to $1.42 inside a month from Wednesday’s close of $1.3773, a downgrade from $1.39 expected in January’s poll.

From there, the loonie will probably recover modestly to $1.40 in six months and $1.37 in a year versus $1.37 and $1.34 predicted in the previous survey. That’s about 30 percent below $1.067, where it was trading when oil prices plummeted. Oil is down more than 70 per cent since mid-2014.

The poll’s 12-month forecasts were in a particularly wide selection, from the seven per cent drop to a gain of 11 per cent. Saxo Bank, probably the most bearish around the Canadian dollar in the poll, expects $1.55 in six months and $1.50 in a year.

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