The USD/CAD pair has retraced to the 1.25 area. Although the loonie is set to stabilize around this region, in the view of economists at ING, USD/CAD should move slowly but surely to the 1.20 level in the coming months.
USD/CAD expecting a gradual move to 1.20
“Domestically, fundamentals have remained very supportive for CAD. The Bank of Canada has kept tapering asset purchases as the Canadian economy recovered and we think they will end QE by year-end, which should allow markets to keep speculating that the first hike will come already in 2022.”
“In the next months, USD resilience and uneven global recovery sentiment may keep USD/CAD around 1.25, but we still expect the pair to trend lower to the 1.20 area as some stabilisation in sentiment would allow CAD’s rate profile to support the currency.”
