The Canadian dollar forecast, at least when measured as it often is against the US dollar, showed signs of improvement in recent months, but forecasts for the near future aren’t as rosy as once predicted. Here we will take a closer look at that forecast and what it means for the Canadian economy in general.

The Canadian Dollar Forecast: And What It Means?

For many, many years, shoppers from the United States could waltz over the Canadian border and purchase both goods and services at a huge discount. Not anymore. Today the Canadian dollar exchange rate is almost even to that of the United States dollar, but some fear the Canadian dollar could begin a steady decline, at least in the near term, due to an economic climate that has investors reluctant to take a risk on growth currencies.

As of the writing of this article, the Canadian dollar had fallen again to C$1.047 to the US dollar, or approximately 95.4 US cents, due to investor concern over the current state—and the projected outlook—of the world economy in light of the ongoing global financial crisis. Trade deficits in both the United States and Canada, as well as a weaker demand in China, are just a few of the factors which may be blamed for this dip.

According to a spokesperson for one of the leading commodity brokers, the currencies in Canada have a tendency to be susceptible to a major global growth lag, and if commodity trading continues to slow, the Canadian dollar could actually suffer a great deal more.

Canadian Dollar Forecast: Where We Were and Where We Are

Back in April of this year, the Canadian dollar actually climbed above the US dollar, due to a Canadian economy that appeared to be improving and the possibility for higher interest rates, but what once attracted investors has now been undermined by a poorer than expected outlook in both the United States and in Europe.

While many predict that the continuing slide in the global economy equates to a Canadian dollar that will continue to fall against its US counterpart, Oliver is much more optimistic about the Canadian dollar forecast. With his forecast of a coming financial crisis in the U.S., he believes that the Canadian Dollar, which is highly linked in value to vast natural resources, will fare much better than the American Dollar, which is highly linked to "financial engineering" of a dubious nature.

One forecaster explained it like this: If the United States and the global economy can avoid going into a double-dip recession, the struggles of the Canadian dollar will be relatively short lived and it will, within the next 12 months, be trading at parity with the US dollar.

Regardless of which way you’re leaning in regards to the Canadian dollar forecast, one thing is certain: Any news regarding an upturn in the value of the Canadian dollar is extremely important to the Canadian economy in terms of attracting new investors, while news to the contrary will almost certainly continue to slow down an already sluggish Canadian economy.