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FX Forecasts

Growing Concern about China Is Putting Pressure on Commodity Currencies

August 23, 2023
Hendrix Vachon
Principal Economist

Risk aversion came roaring back this month amid disappointing data out of China. Risk aversion will likely remain elevated over the coming quarters, especially as economic data is expected to worsen in several countries.

The loonie is currently trading close to 1.36 CAD/USD (0.735 USD) and could lose a bit more ground against the US dollar by the end of the year. Oil prices are expected to drop further as it becomes more clear that supply will be sufficient to meet demand. The loonie should take off later in 2024 so long as the global economy recovers and commodity prices move higher.