First, he expects Canada’s current account deficit will put downward pressure on the currency.
“Second, we doubt that the Bank of Canada will raise interest rates by as much as investors expect,” he wrote. “Given our view that GDP growth will slow below potential next year, we think that the bank will be forced to the side-lines once the policy rate reaches two per cent, probably in January.”
Brown is also calling for weaker oil prices as Iranian supply proves less vulnerable to new U.S. sanctions, and new pipeline capacity allows U.S. producers to ramp up production.
“We see WTI (West Texas Intermediate) falling to $55 per barrel by the end of 2019, from $63 currently,” he wrote.”