Analysts at Citibank point out the Canadian dollar has some catching up to do from a fundamental perspective that should continue to support the loonie over the next months. They forecast USD/CAD at 1.30 over a 0-3 month period and at 1.27 in a 6-12 months horizon.
“The loonie has benefitted from the general reflationary dynamics/risk on momentum we’ve seen across markets. We expect risk sentiment to continue to be an important driver, but also think CAD has some catching up to do from a fundamental perspective such as oil prices. WTI have found a bottom and continue to steadily rise. This may continue to support CAD over our forecast horizon as our forecast WTI at 51$/bbl in 12m.”
“USDCAD has traded through the key resistance at 1.3686 and would also complete a bullish outside week, suggesting the pair can retest the 55d MA at 1.3833 with support at 1.3487.”
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