The loonie is set to find more support in the next couple of quarters, but less so by the end of 2022 when economists at CIBC Capital Markets look for the joint nominal goods and service trade balance to have almost returned back to its Q4 2020 level.
Key quotes
“Nominal exports will get a nice lift from a run of mid-$60 oil prices, and a general firmness in other resources. Meanwhile, the investment income balance will benefit from the mix of equities and direct investment versus low yielding bonds in our international assets and liabilities.”
“We see oil and some other commodity prices abating as global supply responds, while a rush to get back on airplanes and see the world in 2022 and beyond sees the travel deficit balloon to its former heights. That would see the current account deficit widen out again.”
“In addition to our view that there’s more room for the market to bring forward expectations for Fed hikes than for the Bank of Canada, that underpins our view that the CAD has some near-term gains in store, but will be giving those back come 2022.”
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