Trump’s policies will not significantly weaken the outlook for the Canadian economy - BTMU

Analysts at Bank of Tokyo Mitsubishi explained that their outlook for the Canadian dollar in the year ahead is more optimistic than consensus forecasts. 

Key Quotes:

"We are assuming that President Trump’s policies will not significantly weaken the outlook for the Canadian economy. The recent announcement from President Trump that the Keystone XL pipeline has been revived and another pipeline in the Dakotas has been expedited highlights that there are some potential benefits for Canada’s economy as well."

"However, we clearly acknowledge that there are material downside risks to our forecasts for the loonie. If President Trump implements across-the-board tariffs on imports from Canada and/or implements a border tax adjustment, it could result in the loonie becoming significantly weaker than our current forecasts thereby potentially lifting USD/CAD back into the 1.4000’s. At the very least the policy uncertainty from President Trump should encourage a more volatile loonie."