Despite a good start to the year for the loonie, U.S. President Donald Trump's protectionist trade policies will keep pressuring the Bank of Canada into doing all it can to drive the currency down in 2017 according to one money manager.
Greg Taylor, portfolio manager at LOGiQ Asset Management, told BNN in an interview that even though the Canadian dollar had a surprisingly good performance in January, the loonie will still move downwards this year.
"We've had a decent start to the year in the Canadian dollar and I think that's more of a function of some resetting of U.S. dollar expectations," he said. "But I still think the Canadian dollar is going a little lower this year."
Taylor said looming NAFTA renegotiations and the threat of trade barriers in the U.S. following Trump's inauguration Jan. 20 will keep the BoC wary.
"I think the Bank of Canada is going to do everything they can to lower the Canadian dollar to try and stimulate exports," he said.
Taylor’s comments echo those from other observers as policies between the BoC and the U.S. Federal Reserve continue to diverge.
“This is a bank with an agenda,” CIBC economist Benjamin Tal said last April. “The agenda is a weaker Canadian dollar. Whatever they do is designed to lower the value of the dollar.”
Statistics Canada revealed Tuesday that manufacturing unexpectedly drove the Canadian economy up 0.4 per cent in November, but it’s unlikely the BoC will change its current direction according to RBC economist Dawn Desjardins.
"I think they're going to remain cautious until we get a little more clarity in terms of trade policy out of the United States," Desjardins told BNN in an interview.