USD/CAD: Oil to refrain the loonie recovery – CIBC

Oil prices are still sitting at low levels, and the trend back to risk assets looks vulnerable, so analysts at CIBC Capital Markets don’t expect the loonie to hold onto that strength in the near-term. FXStreet’s analyst Joseph Trevisani also noted that the WTI raised but is not yet predicting a rapid economic recovery.

Key quotes

“As the reality of depressed equity earnings, and the limitations on the recovery by the potential for a second wave set in, that would see a stall in oil’s rebound, allowing USD/CAD to reach 1.41 by June and ending Q3 at 1.43.” 

“Looking ahead to the first half of 2021, we expect the loonie to strengthen alongside a more pronounced economic recovery, whose timing is likely dependent on the evolution of the virus and progress towards a vaccine.”

“Look for USD/CAD to still be hovering around 1.41 by the end of next year, held back by the country’s trade imbalance.”