USD/CAD to drop towards 1.17 this summer as loonie looks attractive – NBF

The strength of the global economy and an upgrade to our oil price forecast – from $65 to $75 – implies a slightly stronger Canadian currency in Q3, according to economists at the National Bank of Canada. The USD/CAD pair is seen at 1.17 this summer (compared to 1.19 previously).

The improvement on the public-health front cannot be underestimated

“We expect growth to pick up sharply in the second half of the year, an acceleration that should be conducive to further QE tapering by the Bank of Canada over the coming months.”

“The public-health situation is improving countrywide and the economy is set to take off in the second half of the year. Commodity prices could remain high in an environment of limited supply and strong demand. Moreover, the diverging paths of the US and Canadian central banks are fuelling CAD strength.” 

“We remain confident that the CAD has some room for further appreciation while remaining wary of the possibility that the Fed could become more hawkish if inflation pressures grow too much.”

“The strength of the global economy and an upgrade to our oil price forecast – WTI from $65/barrel to $75/barrel – implies a slightly stronger Canadian currency in Q3. We see a rate of $C1.17 to the USD this summer (compared to $1.19 previously).”