One portfolio manager believes the Canadian dollar is soon to dip, but that a bullish approach to commodities and the sale of U.S. assets could benefit investors as the loonie recovers later this year.

Ryan Lewenza, portfolio manager of Turner Investments at Raymond James, says the Canadian dollar value is “largely range-bound” between the low to upper 70s cents U.S.

“The U.S. dollar has just been on a tear,” Lewenza told BNN Bloomberg, during an interview on Tuesday. “It’s up against the yen — the yen is down 10 per cent, the British pound, all major global currencies are down and it’s because the Fed (U.S. Federal Reserve) is pushing out when they’re expected to cut.”

Lewenza explained that, at the beginning of the year, the Fed was expected to cut six times. “And now with inflation remaining hotter, it’s pushing that out. So when U.S. interest rates are higher than Japanese interest rates or Canadian interest rates, investors flood in.”

He mentioned that he anticipates the Bank of Canada to cut interest rates first.

“They could cut as early as June. And that may cause the Canadian dollar to fall a couple (of) pennies,” Lewenza explained.

“We’re at 73 (U.S. cents). Maybe it bottoms out at 71, 72. But then I see it recovering later on this year and into next year.”

Lewenza pointed to a major driver of the Canadian dollar -- namely commodity prices, which he says carries a “strong long-term correlation.”

“Copper is almost hitting five dollars,” he said. “I have been bullish on commodities.”

He also acknowledged that the correlation between oil and Canadian dollars has “kind of fallen off a little bit.”

“It’s not as highly correlated as it used to be. But I think that correlation will come back. So, if I’m bullish on commodities, I’m bullish on copper, I’m bullish on gold, that should help our Canadian dollar.”

Despite a foreseeable dip in the Canadian dollar following incoming Bank of Canada rate cuts, Lewenza said a clear path forward comes down to utilizing the strength of the U.S. dollar to sell American assets.

“Right now, we’re very happy with our 22 per cent U.S. exposure to the U.S. dollar,” he said.

“We get a little bit of a dip — maybe from that Bank of Canada cut — and we use that to sell some U.S. dollars. So maybe we go sell one of our U.S. investments. We convert that into Canadian dollars at a very high level, and we either use that to buy some Canadian assets or we buy a hedged ETF,” he explained.

Lewenza called the ideal approach “simple.”

“When the Canadian dollar is low, you sell some U.S. assets,” he said. “When the Canadian dollar rallies up to the high 70s, you do the opposite.”