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Strategists at the National Bank of Canada are banking on a recovery for the Canadian dollar after the loonie had its worst month since one year ago. 

Key quotes

“The Canadian dollar’s 2% depreciation against the U.S. dollar in January was the loonie’s worst monthly performance since December 2018.”

“We remain skeptical of the need to push Canadian real interest rates further into negative territory. If we’re correct about the Bank of Canada holding rates unchanged through 2020, that could give a boost to the loonie considering markets are currently pricing at least one rate cut before year-end.” 

“We have pushed to Q2 our target of 1.28 for USD/CAD.”