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JPMorgan Cuts Loonie Forecast as USMCA Deal Faces Turbulence

  • Canadian currency seen sliding to 1.35 per dollar by June
  • JPMorgan sees 10% chance that new trade accord collapses
Canadian Currency As Canada Fires Back At Metals Tariffs
Photographer: Brent Lewin/Bloomberg

As current political turmoil in Washington threatens to bleed into the ratification of a new regional trade pact between the U.S., Mexico and Canada, JPMorgan Chase & Co. sees the Canadian dollar getting caught in the crossfire.

The bank now expects the Canadian currency to weaken to C$1.35 per dollar by the middle of 2019, having previously forecast that it would be around C$1.30. A key reason for the pessimism is the fraught outlook for the passage this year of the U.S.-Mexico-Canada Agreement, according to analysts Daniel Hui and Patrick Locke. Ratifying the pact will be “bumpier” than most investors realize given the deep fissures within a split U.S. Congress, as well as an ongoing partial government shutdown.