FX FORECASTS

CONTENTSHighlights and Editorial ...................................... 1Canadian Dollar ................................................. 3Euro ................................................................... 4

British Pound and Swiss Franc ............................ 5Yen and Australian Dollar .................................. 6

Emerging Currencies .......................................... 7Chinese yuan , Mexican peso, Brazilian real

Tables ................................................................ 8

François Dupuis, Vice-President and Chief Economist • Mathieu D’Anjou, Deputy Chief Economist • Hendrix Vachon, Senior Economist Desjardins, Economic Studies: 514-281-2336 or 1 866-866-7000, ext. 5552336 • desjardins.economics@desjardins.com • desjardins.com/economics

NOTE TO READERS: The letters k, M and B are used in texts and tables to refer to thousands, millions and billions respectively.IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. The data on prices or margins are provided for information purposes and may be modified at any time, based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. The opinions and forecasts contained herein are, unless otherwise indicated, those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group. Copyright © 2019, Desjardins Group. All rights reserved.

HIGHLIGHTS

f As fears could last longer elsewhere, a new lull in the United States could help the greenback, all the more so if the expectation of a new round of interest rate hikes were to reappear.

f It is difficult to expect that the euro will appreciate much as long as the issue of economic divergence on both sides of the Atlantic persists. In the short term, the euro could further depreciate against the U.S. dollar. If the German economy regains some strength, the euro could re-embark on an upward trend beginning around mid-2019.

f Assuming a no-deal Brexit will be avoided, but that the uncertainty surrounding this issue will linger on to some extent, the pound could appreciate slightly by the end of the year.

f The Canadian dollar could appreciate to around US$0.77. This underpins slightly higher oil prices as well as the resumption of monetary tightening in Canada in the second half of the year.

f The yuan had been depreciating significantly in 2018 as the threat of U.S. protectionism escalated. More recently, it was tending to appreciate, which seems in keeping with the hope that the trade tensions between China and the United States would ease.

The U.S. dollar tends to appreciate primarily when uncertainty rises and investors’ appetite for risk falls. As it so happens, since the beginning of the year, the U.S. currency still seems attractive despite the return of a certain appetite for risk. After losing ground at the beginning of the year, the U.S. dollar effective exchange rate index (DXY) is sitting higher than at the end of 2018 (graph 1). Is this sustainable?

A Strong Performance, but Far from WidespreadAnalyzing the trend of the U.S. dollar using only the DXY index can prove to be deceptive. This index is based solely on a basket holding no more than a few currencies, i.e., the Canadian dollar, euro, pound sterling, yen, Swiss franc and Swedish krona. In fact, since the beginning of the year, the U.S. dollar has depreciated against several currencies, most notably those of emerging countries (graph 2 on page 2). This clearly demonstrates that the increased appetite for risk globally has weighed on the U.S. dollar. On the other hand, it has appreciated against other currencies, including the euro, yen, Swiss franc and

Can the U.S. Dollar Only Go Down from Here?

ECONOMIC STUDIES | FEBRUARY 19, 2019

GRAPH 1Despite the market rebound, the U.S. dollar remains attractive

* Based on a basket of currencies that includes the Canadian dollar, euro, pound, yen, Swiss franc and Swedish krona.Sources: Datastream and Desjardins, Economic Studies

88

90

92

94

96

98

100

102

104

2017 2018 2019

U.S. dollar effective exchange rate (DXY)*

Index

#1 BEST OVERALLFORECASTER - CANADA

ECONOMIC STUDIES

2FEBRUARY 2019 | FX FORECASTS

Swedish krona, or four of the six currencies included in the DXY index.

The challenges facing the European currencies are nothing new, given the more evident economic uncertainty in this part of the world. The slowdown in economic growth in Europe is already fairly obvious (graph 3). Italy is officially in recession, and Germany barely avoided joining it in the fourth quarter of 2018. The lack of any signs of improvement is not helping, and not to mention other threats in the short term such as the social tensions in France involving the yellow vests, the approaching deadline to reach an agreement on Brexit, and the customs tariffs that the Trump administration could impose on European cars.

Therefore, local concerns seem to be the primary reason for the greenback’s strong performance against some currencies. In the case of the yen, this appears to be related mostly to the fact that it is also acting as a safe-haven currency at a time of high market volatility. Therefore, the current lull is consistent with a weaker yen.

The United States Must Remain Worry FreeUntil just recently, two major threats hung over the U.S. economy: an escalation of the protectionist measures against China and a new government shutdown. These two threats have decreased considerably, which, in relative terms, can help the U.S. dollar, especially against the currencies of countries where the threats remain high. That being said, all is not sunshine and roses for the U.S. economy, which has had its share of negative data recently. In particular, retail sales and industrial production suggest economic activity will slow down even more in the short term (graph 4). There are also doubts about the expected positive impact of tax refunds in the first half of the year. Many expected that last year’s tax reform would translate into bigger refunds, but this doesn’t seem to have spread across the board to include all U.S. taxpayers.

Should fears about the U.S. economy in the short term rise once again, this could only encourage the Federal Reserve to exercise even greater caution, as inflation does not seem to pose any threat. If some investors were to anticipate a drop in interest rates in the United States, the U.S. dollar could pay the price unless it were to benefit even more from safe-haven effect. That being said, our scenario for now sees the U.S. economy rebounding. As fears could last longer elsewhere, a new lull in the United States could help the greenback, all the more so if the expectation of a new round of interest rate hikes were to reappear.

François Dupuis, Vice-President and Chief Economist

Hendrix Vachon, Senior Economist

GRAPH 3Real GDP throughout Europe clearly fell in 2018

* Desjardins forecast for the fourth quarter in the United States and European Commission forecast for the fourth quarter in Sweden.Sources: Datastream and Desjardins, Economic Studies

Real GDP in 2018*

Quarterly annualized variation in %

-1

0

1

2

3

4

5

U.S. U.K. Euro zone Germany Italy Sweden

-4 -3 -2 -1 0 1 2 3 4 5

ThailandRussiaBrazil

IndonesiaCanada

MalaysiaChina

MexicoSouth Africa

AustraliaUnited Kingdom

NorwayTurkey

TaiwanJapanKorea

Euro zoneArgentina

IndiaSwitzerland

Sweden

GRAPH 2The U.S. dollar fell against the currencies of several emerging countries

* Since the beginning of the year.Sources: Datastream and Desjardins, Economic Studies

In %

Change in the U.S. dollar against the major currencies of advanced and emerging countries*

GRAPH 4Worst drop in retail sales excluding motor vehicles and gasoline since the last recession

Sources: U.S. Census Bureau and Desjardins, Economic Studies

Retail sales excluding motor vehicles and service stations

Monthly variation in %

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

2005 2007 2009 2011 2013 2015 2017 2019

3FEBRUARY 2019 | FX FORECASTS

ECONOMIC STUDIES

• The Canadian dollar ended the year on a low note, but it quickly regained some of the ground lost. It is currently hovering around US$0.75. This rise is in keeping with the return of a certain appetite for risk on the financial markets and the rebound in the price of oil and other commodities.

• Analyzed over a 3-month period, the Canadian dollar’s momentum is back to neutral. However, the slight downward trend indicated by the exchange rate’s 200-day moving average seems difficult to crack. The negative balance of the speculative positions shows that investors are continuing to bet on a depreciation.

• From a fundamental standpoint, the Canadian economy has shown pockets of weakness recently. The difficulties in exporting Western oil, among other things, have become more acute, forcing the Alberta government to cut production. The Canadian real estate market situation is also being closely watched. Moreover, the international economic context is worrying. The slowdowns in the United States, China and Europe threaten to cause a drop in Canadian exports and to discourage business investment.

• But it’s not all doom and gloom. The labour market remains particularly strong in Canada. This is a good omen for consumption, especially since consumer confidence was up in January. Furthermore, the oil production cuts in Alberta seem to be working. The prices for Canadian-produced oil bounced back quickly, thereby limiting the financial losses for this economic sector. In addition, the pace of oil production could also pick up faster than initially expected.

• The Bank of Canada (BoC) downgraded its short-term economic growth forecasts and appears to be in less of a hurry to continue its monetary tightening. However, contrary to other central banks, the BoC is still indicating that more interest hikes are on the way. It is expecting economic activity to pick up as early as the second quarter, which could justify resuming monetary tightening later in the year.

• Forecasts: Currently, the threats are many, and our scenario is counting on these to subside during the coming quarters. If this were to happen, it could lift the Canadian dollar to around US$0.77. This also underpins slightly higher oil prices as well as the resumption of monetary tightening in Canada in the second half of the year.

Canadian Dollar (CAD)Waiting for Fairer Winds to Blow

CANADIAN DOLLARExchange rate and trend

Sources: Datastream and Desjardins, Economic Studies

C$/US$ (inverted scale)

0.90

1.00

1.10

1.20

1.30

1.40

1.502013 2014 2015 2016 2017 2018 2019

Canadian exchange rate200-day moving average

CANADIAN DOLLARNet speculative positions

In %

-60

-40

-20

0

20

40

60

2013 2014 2015 2016 2017 2018 2019

Sources: Datastream and Desjardins, Economic Studies

CANADIAN DOLLARMomentum

Sources: Datastream and Desjardins, Economic Studies

Quarterly variation in %

-15

-10

-5

0

5

10

15

20

2013 2014 2015 2016 2017 2018 2019

ECONOMIC STUDIES

4FEBRUARY 2019 | FX FORECASTS

• The sudden rise in concern on financial markets in the final months of 2018 hit the euro, as investors preferred to seek shelter in the U.S. dollar, the Swiss franc and the yen. The change in the Federal Reserve’s tone and the global stock market rebound temporarily helped the euro bounce back above US$1.15 at the beginning of 2019, but downside pressure on the common currency quickly reappeared with the troubling political and economic developments in Europe.

• Fears of a global recession seem to be subsiding, as the economic statistics out of the U.S. remain strong overall, and the central banks have clearly signalled that they will be flexible and cautious. However, the euro zone’s economic outlook continues to deteriorate, as the second half of 2018 was extremely difficult for several economies, and nothing points to a major improvement in the situation at the start of 2019. At first, it was possible to think that the flagging growth in Germany was mostly a reflection of the temporary effects of the new vehicle emission standards on industrial output and motor vehicle sales, but this economy’s problems appear to be more widespread today. The political and social situations in several countries, including Germany, France, Italy and Spain, are also troubling.

• As expected, the European Central Bank wound down its bond purchases at the end of 2018. It feels that the fundamental factors underpinning growth in the euro zone are still in place, but it does acknowledge that the recent data were lower than anticipated and that the downside risks of the economy have increased. Against this backdrop, it appears unlikely that it will begin tightening the money supply before the end of the year, and it could soon announce new long-term funding operations to ensure the European financial markets are flush with liquidity.

• Forecasts: It is difficult to expect that the euro will appreciate much as long as the issue of economic divergence on both sides of the Atlantic persists. In the short term, the euro could further depreciate against the U.S. dollar. If the German economy regains some strength, the euro could re-embark on an upward trend beginning around mid-2019.

Euro (EUR)The Downside Risks Have Gained the Upper Hand

EUROExchange rate and trend

Sources: Datastream and Desjardins, Economic Studies

US$/€

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

2013 2014 2015 2016 2017 2018 2019

Euro zone exchange rate200-day moving average

EURONet speculative positions

In %

-60

-40

-20

0

20

40

2013 2014 2015 2016 2017 2018 2019

Sources: Datastream and Desjardins, Economic Studies

EUROMomentum

Sources: Datastream and Desjardins, Economic Studies

Quarterly variation in %

-20

-15

-10

-5

0

5

10

2013 2014 2015 2016 2017 2018 2019

5FEBRUARY 2019 | FX FORECASTS

ECONOMIC STUDIES

that Britain’s key rates will not rise any time soon. Assuming a no-deal Brexit will be avoided, but that the uncertainty surrounding this issue will linger on to some extent, the pound could appreciate slightly by the end of the year.

Like most of the currencies, the pound generally depreciated against the U.S. dollar in the closing months of 2018 before regaining some of the ground lost in the early weeks of 2019. However, the developments surrounding Brexit have caused the pound to swing wildly, and everything indicates that this will continue as March 29, the date on which the United Kingdom is expected to officially leave the European Union, approaches. The post-Brexit negotiations finally progressed at the end of 2018, but the British government remains incapable of winning parliament’s approval of the agreement concluded with European leaders, as the issue of the Irish border continues to pose a considerable obstacle. As most of the British members of parliament and European leaders seem to want to avoid a no-deal Brexit, the worst-case scenario should be avoided. For example, the March 29 deadline could be pushed back. The British economy is also showing signs of weakness, as the negative effects of the uncertainty surrounding Brexit seem to be growing. As a result, the Bank of England anticipates that real GDP in Britain will grow only 1.2% in 2019, suggesting

The Swiss franc has played its role well as a safe haven in recent months. As a result, it appreciated against the euro and the dollar in the closing months of 2018 before falling back against these two currencies in January, when the stock markets rebounded. Hovering around €1.14, the franc remains relatively strong compared with the euro, and the Swiss monetary authorities will be watching very closely as the disturbing economic and political developments in the euro zone could lead to new upward pressure on the franc in the short term. The Swiss economy had a good year in 2018, with real GDP growing around 2.5%, but growth clearly slowed in the second half of the year. As inflation is expected to remain below 1.0% in 2019, nothing points to a tightening of the Swiss monetary policy this year. The Swiss franc is expected to remain strong in the short term, but it could drop in the second half of the year if international uncertainty eases.

British Pound (GBP)Brexit Will Continue to Dominate Fluctuations in the Pound in the Short Term

BRITISH POUNDExchange rate and trend

Sources: Datastream and Desjardins, Economic Studies

US$/£

1.15

1.25

1.35

1.45

1.55

1.65

1.75

2013 2014 2015 2016 2017 2018 2019

British exchange rate200-day moving average

Swiss Franc (CHF)The Franc Threatens to Remain in Demand

SWISS FRANCExchange rate

Sources: Datastream and Desjardins, Economic Studies

Franc/US$

0.951.001.051.101.151.201.251.301.35

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

2013 2014 2015 2016 2017 2018 2019

Franc/US$ (left) Franc/€ (right)

Franc/€

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6FEBRUARY 2019 | FX FORECASTS

As a safe-haven currency, the yen tends to appreciate at a time of uncertainty. The effect appeared greater at the end of 2018 because of the risk the trade war between China and the United States would escalate and the presence of other concerns relating more specifically to the U.S. economy. In the aftermath, the Japanese exchange rate temporarily reached ¥108/$US. Since then, it has been increasing slightly, as concerns have eased and investor appetite for risk is back on the rise.

In the event the risks were to remain contained, it would seem likely that the yen would depreciate more, possibly to ¥113/$US. The Japanese economy remains fragile. Inflation is also struggling to accelerate, which is forcing the Bank of Japan to continue to purchase securities and maintain slightly negative key rates. The Japanese government also plans to raise the sales tax from 8% to 10% in October, which should slow down consumption. The impact of this tax increase risks being felt at the same time as construction for the Olympic Games in Tokyo in 2020 begins to wind down.

After depreciating during most of 2018, the Australian dollar is now stabilizing around US$0.71. The trade tensions between the United States and China penalized the Australian currency. At the risk of damaging the Chinese economy, these trade tensions could have implications for the Australian economy in the form of a drop in exports and investment. China is the number one buyer of Australian exports.

The Australian economy is still humming along relatively well for now. The labour market remains especially strong. The fact that the Reserve Bank of Australia (RBA) is keeping low interest rates as well as the government’s increased spending on infrastructure are helping to compensate for the uncertainty shrouding the Chinese economy and the slowdown in the housing market. House prices are down in several Australian cities. Demand for mortgages is also low. Support from the RBA and the government may prove necessary for some time to come. The upside potential of the Australian dollar seems limited in the short term.

Yen (JPY)Further Depreciation Is Delayed amid Safe-Haven Effect

YENExchange rate and trend

Sources: Datastream and Desjardins, Economic Studies

¥/US$ (inverted scale)

7580859095

100105110115120125130

2013 2014 2015 2016 2017 2018 2019

Japanese exchange rate200-day moving average

Australian Dollar (AUD)A Destiny Linked to the Situation in China

AUSTRALIAN DOLLARExchange rate and trend

Sources: Datastream and Desjardins, Economic Studies

US$/A$

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

1.10

2013 2014 2015 2016 2017 2018 2019

Australian exchange rate200-day moving average

7FEBRUARY 2019 | FX FORECASTS

ECONOMIC STUDIES

CHINESE YUAN (CNY)

The yuan had been depreciating significantly in 2018 as the threat of U.S. protectionism escalated. More recently, it was tending to appreciate, which seems in keeping with the hope that the trade tensions between China and the United States would ease. This improvement could quickly fade should the current trade negotiations fail and new customs tariffs be announced. Moreover, the downward trend in the Chinese economy’s growth is favouring the adoption of expansionist policies. These policies are expected to bring back some downward pressure on the yuan in 2019.

MEXICAN PESO (MXN)

After a difficult start to the fall, which caused the USD/MXN pair to hit roughly 20.5 pesos, the value of the Mexican currency soared in December in spite of the very negative sentiment in the financial markets. Thanks to good economic data and a reassuring budget introduced by the Andrés Manuel López Obrador government, the pair fell to roughly 19 pesos in early 2019. However, the Mexican economic figures released since then have been mixed. This, combined with the financial difficulties of petroleum giant Pemex, applied downward pressure on the peso in recent weeks. The peso is expected to hover around its current level in the coming months, but a gradual appreciation is forecast later. Mexico’s political situation could still keep the peso volatile.

BRAZILIAN REAL (BRL)

The Brazilian currency has appreciated slightly since the beginning of the year, helped by the Federal Reserve’s more conciliatory tone and the increased appetite for risk. The new Brazilian president, Jair Bolsonaro, has promised significant reforms to stimulate the Brazilian economy, which is still struggling to recover from the crisis that shook the country in 2015 and 2016. After rising slightly in 2018, inflation recently dropped back below the 4% mark. With the inflation target pegged at 4.25% in 2019, the Central Bank of Brazil is not under pressure to tighten its monetary policy at this time. The real could appreciate in 2019, especially if the Brazilian economy improves. However, a possible new round of volatility on the financial markets, or renewed expectations of key interest rate hikes in the United States, could limit how much the real appreciates.

Emerging CurrenciesA Good Start to the Year

BRAZILIAN REALExchange rate and trend

Sources: Datastream and Desjardins, Economic Studies

Real/US$

1.50

2.00

2.50

3.00

3.50

4.00

4.50

2013 2014 2015 2016 2017 2018 2019

Brazilian exchange rate200-day moving average

MEXICAN PESOExchange rate and trend

Sources: Datastream and Desjardins, Economic Studies

Peso/US$

11.00

12.50

14.00

15.50

17.00

18.50

20.00

21.50

23.00

2013 2014 2015 2016 2017 2018 2019

Mexican exchange rate200-day moving average

Sources: Datastream and Desjardins, Economic Studies

6.00

6.15

6.30

6.45

6.60

6.75

6.90

7.05

2013 2014 2015 2016 2017 2018 2019

Chinese exchange rate200-day moving average

CHINESE YUANExchange rate and trend

Yuan/US$

ECONOMIC STUDIES

8FEBRUARY 2019 | FX FORECASTS

SPOT PRICE

Feb. 18 -1 month -3 months -6 months -1 year Higher Average Lower

AmericasArgentina – peso 38.7250 2.88 7.57 30.19 97.07 40.7750 30.4952 19.6500Brazil – real 3.7396 -0.12 -0.30 -5.03 15.88 4.1838 3.7206 3.2271Canada – (USD/CAD) 1.3238 -0.09 0.72 1.16 5.55 1.3658 1.3070 1.2542Canada – (CAD/USD) 0.7554 0.09 -0.72 -1.15 -5.25 0.7973 0.7651 0.7322Mexico – peso 19.2667 1.12 -4.56 1.16 4.19 20.7489 19.2827 17.9486

Asia and South PacificAustralia – (AUD/USD) 0.7131 -0.51 -2.80 -2.51 -9.88 0.7913 0.7366 0.6985China – yuan renminbi 6.7667 -0.18 -2.47 -1.61 6.59 6.9757 6.6677 6.2690Hong Kong – dollar 7.8478 0.06 0.24 -0.02 0.33 7.8501 7.8406 7.8036India – rupee 71.3865 0.25 -0.82 1.84 11.17 74.3400 69.3293 64.2150Japan – yen 110.62 0.77 -1.96 0.10 4.05 114.54 110.36 104.74New Zeland – (NZD/USD) 0.6848 1.55 -0.44 3.16 -7.33 0.7389 0.6854 0.6444South Korea – won 1,126 0.35 -0.25 0.09 4.51 1,144 1,107 1,055

EuropeDenmark – krona 6.5969 0.42 0.95 1.18 9.88 6.6500 6.3804 5.9846Euro zone – (EUR/USD) 1.1307 -0.52 -0.77 -0.89 -9.17 1.2448 1.1697 1.1251Norway – kroner 8.6082 0.61 1.99 1.82 10.63 8.7724 8.2314 7.6813Russia – ruble 66.2387 0.12 0.57 -1.77 17.64 70.3413 64.0710 56.0000Sweden – krona 9.2547 2.52 2.76 1.11 16.14 9.3078 8.8347 7.9682Switzerland – swiss franc 1.0040 0.85 0.14 0.88 8.53 1.0092 0.9840 0.9251United Kingdom – (GBP/USD) 1.2928 0.17 0.70 1.48 -7.93 1.4330 1.3226 1.2525

* In comparison with the U.S. dollar, unless otherwise indicated.Note: Currency table base on previous day closure.

TABLE 1Currency market: Yields

COUNTRY – CURRENCY*

VARIATION (%) LAST 52 WEEKS

Q3 Q4 Q1f Q2f Q3f Q4f Q1f Q2f Q3f Q4f

U.S. dollarCanadian dollar USD/CAD 1.2906 1.3638 1.3333 1.3245 1.3072 1.2987 1.2903 1.2821 1.2987 1.3158Euro EUR/USD 1.1615 1.1431 1.1100 1.1100 1.1300 1.1500 1.1700 1.1800 1.2000 1.1900British pound GBP/USD 1.3041 1.2736 1.2800 1.2800 1.3100 1.3200 1.3400 1.3500 1.3800 1.3700Swiss franc USD/CHF 0.9768 0.9837 1.0100 1.0100 1.0000 0.9900 0.9800 0.9800 0.9800 0.9800Yen USD/JPY 113.70 109.58 110.00 110.00 112.00 113.00 112.00 111.00 108.00 105.00Australian dollar AUD/USD 0.7230 0.7052 0.7100 0.7200 0.7300 0.7400 0.7500 0.7500 0.7500 0.7400Chinese yuan USD/CNY 6.8689 6.8785 6.8000 6.9000 6.8500 6.8000 6.7500 6.7000 6.7000 6.7500Mexican peso USD/MXN 18.72 19.65 19.50 19.50 19.00 18.50 18.00 18.00 18.25 18.50Brazilian real USD/BRL 4.0036 3.8745 3.8000 3.8000 3.7000 3.6000 3.5000 3.5000 3.6000 3.7000

Effective dollar1 105.82 107.95 108.70 108.50 107.20 106.10 104.80 104.10 103.00 103.60

Canadian dollarU.S. dollar CAD/USD 0.7748 0.7333 0.7500 0.7550 0.7650 0.7700 0.7750 0.7800 0.7700 0.7600Euro EUR/CAD 1.4990 1.5590 1.4800 1.4702 1.4771 1.4935 1.5097 1.5128 1.5584 1.5658British pound GBP/CAD 1.6830 1.7369 1.7067 1.6954 1.7124 1.7143 1.7290 1.7308 1.7922 1.8026Swiss franc CAD/CHF 0.7569 0.7213 0.7575 0.7626 0.7650 0.7623 0.7595 0.7644 0.7546 0.7448Yen CAD/JPY 88.09 80.35 82.50 83.05 85.68 87.01 86.80 86.58 83.16 79.80Australian dollar AUD/CAD 0.9332 0.9617 0.9467 0.9536 0.9542 0.9610 0.9677 0.9615 0.9740 0.9737Chinese yuan CAD/CNY 5.3222 5.0438 5.1000 5.2095 5.2403 5.2360 5.2313 5.2260 5.1590 5.1300Mexican peso CAD/MXN 14.50 14.41 14.63 14.72 14.54 14.25 13.95 14.04 14.05 14.06Brazilian real CAD/BRL 3.1021 2.8411 2.8500 2.8690 2.8305 2.7720 2.7125 2.7300 2.7720 2.8120

f: forecasts; 1 Trade-weighted against major U.S. partners (1973 = 100).Sources: Datastream, Federal Reserve Board and Desjardins, Economic Studies

TABLE 2Currency market: History and forecasts

END OF PERIOD

2018 2019 2020