The Canadian dollar snapped back sharply on Thursday, rising from a steep drop of more than a U.S. cent over a two-day period earlier in the week.
The Canadian dollar was at 79.10 cents U.S. in Thursday morning trading, up 0.74 per cent of a U.S. cent, retracing the losses sustained after Monday’s close of 79.39 cents U.S.
A surge in the U.S. dollar since then sent the loonie lower by about half a U.S. cent on Tuesday and again on Wednesday. The loonie hit a six-year low of 78.14 cents U.S. on Wednesday but closed slightly higher at 78.36 cents.
MORE: The loonie is getting hammered today. Here’s why.
Weaker outlook
Major currencies, including Canada’s loonie, have been struggling against the rising strength of the U.S. dollar as the American economy revives and the U.S. Federal Reserve prepares to raise key lending rates for the first time in years.
The Canadian dollar is also affected by weak demand and prices for key commodities, particularly oil, that are important for its export trade.
The Royal Bank downgraded Thursday its latest forecast for the Canadian economy in 2015 after a sharp drop in energy prices.
The bank projects Canada’s real GDP to grow by 2.4 per cent this year — a reduction of 0.3 percentage points from its forecast issued last December. RBC said while the drop in energy prices is a negative for the oil and gas sector, much of the weakening will be offset by stronger consumer spending and exports.
That outlook helps explain why experts at TD Bank believe the Canadian dollar will slip further this year.
On the commodity markets, the April crude contract on the New York Mercantile Exchange is up 38 cents to US$48.55 a barrel.
Comments