The song “Spinning Wheel” is the best description for the Canadian and U.S. currency outlook in 2014, according to Avery Shenfeld, chief economist, CIBC World Markets Inc..

“What comes up must come down,” said Shenfeld, who spoke as part of an economic outlook panel hosted by the Economic Club of Canada in Toronto.

“And I think the U.S. dollar will be coming down against the Canadian dollar in the latter half of the year.”

But first, the Canadian dollar is likely to fall roughly 10 cents below parity against the U.S. dollar in the first half of 2014, said Shenfeld. The greenback is likely to rise against the loonie because of the pullback in the Federal Reserve’s quantitative easing program, which tends to favour the U.S. dollar. As well, Shenfeld says, it will likely take some time for global economic growth – which favours commodity currencies – to gain momentum.

That scenario is likely to change by late 2014, Shenfeld said.

Canada’s trade deficit has been “an Albatross around the neck of the Canadian dollar” said Shenfeld, and the expected growth in the global economy will likely lift some of that weight later in the year.

Also, core inflation is likely to rise enough in the latter half of 2014 to prompt the Bank of Canada to become more neutral or even hawkish regarding interest rates, Shenfeld said.