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Bialas concedes the currency faces some hurdles in the first quarter. The Canadian dollar fell to a 10-month low in December against its rallying U.S. counterpart after the U.S. Federal Reserve raised interest rates for only the second time since the global financial crisis in 2008.

Trade Hurdles

“The beginning of the year could be difficult for the Canadian dollar, but we’re expecting the trend to start slowing down near 1.38 [72.46 US cents],” a level that could be reached near the end of the first quarter, Bialas said by phone from Warsaw. “The Canadian economy will feel the positive effects of an acceleration of growth worldwide and the risks to trade with the U.S. — the worries over tearing down NAFTA — will drop.”

Investors have been concerned Trump may throw up roadblocks to trade between Canada and the U.S. after he vowed to renegotiate the North American Free Trade Agreement. On Tuesday, he threatened to make General Motors Co. pay a tariff for importing Mexican-made cars into the U.S.

Initial Surge

The Canadian dollar jumped 1 per cent to 75.22 US cents on Wednesday, extending its run as the best-performing major currency into this year. It’s still much weaker than its five-year average of 87.06 US cents.

Investors have priced in “too much pessimism” in the loonie, given the recent increase in oil prices, a global pick-up in inflation and the fact that Canada’s economy is already past its rough patch, according to Vasileios Gkionakis, head of global foreign-exchange strategy at UniCredit Group SpA in London. He expects the currency to appreciate to 81.96 US cents against the greenback by the end of this year, one of the most bullish forecasts in a Bloomberg survey.