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Bank predicts lower loonie

Published by Steve Coleman on September 28, 2011

The Bank of Montreal is predicting the laws of gravity may weigh heavy on the loonie for the next year.

After climbing above parity with the US dollar this year, the Canadian dollar could come back down to 93 cents US by the end of the year and stay in the 95 cent range until the end of 2012.

Canada's dollar lost about five cents versus the Greenback last week over European money woes.

"While market action over the past few days has been positive in the hope of a broad European solution, we expect the crisis to linger well into 2012, if not longer," CTV News quoted the report as saying.
"Even if European leaders are able to satisfy markets with bold action, global growth isn't likely to rebound quickly, which should weigh on commodity prices and the loonie," CTV News quoted the report as saying. "Indeed, European economies are likely to be hamstrung by austerity measures and restructuring for at least the next few years."

Once the global situation starts to sort itself out over the next year, the Canadian dollar is expected to climb back to higher levels as the demand for resources increases.

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