A Reuters poll released on Wednesday said loonie will rise by the end of this year due to the global economic outlook becoming more favorable for commodity-linked currencies and potential interest rate cuts from central banks in 2024. However, the average forecast from analysts is for the Canadian dollar to change slightly in three months' time, from C$ 1.34 (or 74.63 US cents) to C$ 1.30, which is a gain of just over 3%.

China is one of the main drivers of rising optimism. A quick rebound in its economy is likely to spur demand for goods produced by Canada, potentially helping to avoid a recession if it does not lead to higher inflation and further interest rate increases. Other commodity-linked currencies, such as the Australian dollar and emerging market currencies, are also expected to benefit from China's opening.

Last month, the Bank of Canada became the first major central bank to suspend its tightening campaign, saying it would take time to assess whether raising rates would benefit inflation. The US Federal Reserve, the European Central Bank, and the Bank of England are also on hold, but have not yet finished raising rates.

With the end of tightening just around the corner, markets are hopeful that the Fed and Bank of Canada will move to cut rates by the end of the year and then cut more sharply in 2024. Equities are the ones that will benefit the most in such a situation.