The Canadian dollar advanced in April but it did under-perform advancing less than many other G10 currencies as the USD/CAD pair fell from 1.2576 to 1.2317. On a year-to-date basis, the loonie remains the best performing currency reflecting the positive outlook – which analysts at MUFG Bank believe is justified.
See: USD/CAD set to nosedive towards the 1.1750 mark by end-2022 – BMO
CAD outlook remains positive
“The Bank of Canada tapered its QE pace from CAD4 B per week to CAD3 B and unlike the RBA and the RBNZ, the BoC at its meeting in April was more willing to embrace a guidance indicating the prospect of a rate hike in 2022.”
“Governor Macklem in the press conference repeated policy would not be tightened until the economy is fully recovered but the projections mean that is now expected to be sooner”
“The BoC through ending certain liquidity support measures is seeing its balance sheet shrink and the rate guidance sets the BoC apart from other central banks that could see CAD continue to outperform.”
“The Canadian government also announced a further CAD100 Bof fiscal spending in its budget in April that leaves CAD set for further gains over the forecast period ahead.”
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