Attracted by relatively low government debt, a stronger economic recovery and its healthier banks, foreign investors took a shine to Canadian assets in the aftermath of the financial crisis. More recently, however, those assets appears to have lost their shine a little, as Canada's safe haven appeal has waned. As Canada's economy and stock market underperform developed market economies elsewhere and interest rate differentials widen further, we expect net foreign purchases of Canadian assets to slow further. Softening investor sentiment could put even downward pressure on the Canadian dollar. We expect the loonie to end this year at less than US$0.90.
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