Both robust global demand and a weaker sterling in the months ahead should allow the external sector to provide growth with a slightly positive contribution this year. |
Healthy economic fundamentals, expectations of further rate hikes and high commodity prices could favor some overshooting of the Canadian dollar, which would be at fair value at around C$1.20 (to the U.S. dollar). |
Inflationary pressures should also remain under control, thanks to slowing earnings growth which should avoid the need for any rate hike by the end of 2006. |