CAD: BoC Widens The CAD Goalposts: Where To Target?

The Canadian dollar was on the back foot due to wobbling oil prices and some pressure from the Bank of Canada. What’s next?

Here is their view, courtesy of eFXnews:

The BoC has expressed concern regarding a strengthening C$ before, however those references in 2015/16 occurred when the loonie was at or stronger than 80 cents (USDCAD 1.25).

Last week’s statement took aim at the strengthening of the C$ versus other currencies. Despite the loonie being little changed against the US$ since the previous MPR, it was up almost 6% against a basket of other currencies. That’s particularly important given that a re-working of the Bank’s Foreign Activity Index, designed to better track actual exports, raised the weights of other countries and downgraded the US.

With the suggestion that a rate cut is still on the table as well, we expect the loonie to depreciate against a range of currencies and USDCAD to hit 1.39 in six months.