TORONTO (Reuters) - The Canadian dollar is expected to hold steady just below parity with its U.S. counterpart in the next few months before regaining equal status in 6 months and edging higher than the greenback a year from now.
A poll of 49 global foreign exchange strategists released on Thursday showed slightly more buoyant forecasts for the Canadian currency in the near term than in a similar poll a month ago, as decent U.S. economic data has partly offset continued uncertainty in Europe.
Median forecasts in the poll showed the currency is seen at C$1.01 to the U.S. dollar, or 99.01 U.S. cents, one month and three months from now, near levels seen this week in the wake of Greece's decision to hold a referendum on the bailout plan.
The Canadian dollar is expected to strengthen into 2012, edging up to parity in six months and to C$0.985 in a year's time, the poll showed.
The previous survey in October had forecast the currency to trade at C$1.04 in one month, C$1.02 in three months, C$1.00 in six months and C$0.98 one year.
Analysts cautioned that it is an especially difficult time to make projections on the currency, given that there could be dramatically different outcomes depending on whether the European debt crisis, and Greece's future, have a positive outcome - or not.
There is so much uncertainty in Europe, and nobody knows if Greece is going to remain in the euro, and if not, some of the consequences could be quite severe, said David Bradley, director of foreign exchange trading at Scotia Capital.
It is difficult to forecast because events like the European crisis haven't come across our path before -- at least, not to quite this extent.
The Canadian dollar is expected to be stronger a year from now, if only by two cents, in part because Europe's situation will be clearer - if not yet resolved - and a global economic recovery may be further along, Bradley said.
If the global economy picks up, there is more demand for commodities, and commodity prices are higher. And that's going to benefit the Canada dollar.
The currency stood around C$1.0092 to the U.S. dollar, or 99.09 U.S. cents, early on Thursday.
Canada's commodity-linked currency has mostly been trading below parity with the U.S. dollar since losing ground in late September, falling prey to risk aversion among investors who fear a probable Greek default will spread to Europe, boosting chances of a global recession.
Canada became the first of the Group of Seven advanced economies to raise interest rates following the 2008 financial crisis, hiking three times from June to September last year, but the central bank suggested last months rates will stay lower for longer amid a gloomy global outlook.
The prospect of lower official interest rates have dampened investor interest in the Canadian dollar as higher returns are sought elsewhere.