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Analysts at Citibank see the USD/CAD pair trading at 1.30 on the three-month horizon and at 1.27 in six to twelve months. In the short-term, they point out markets looked for signs that the Bank of Canada could lean towards shifting the policy objective towards a more dovish approach, and the little changes in the central bank’s language supported the loonie. 

Key Quotes:

“We expect risk sentiment to be an important driver, but also think CAD has catching up to do from a fundamental perspective. WTI, and correspondingly Canada’s ToT, have found a bottom. We forecast a continued rebound here with WTI at 56$/bbl in 12m. Additionally, economic surprises in Canada continue their positive trajectory. This may continue to support CAD.”

“USDCAD has broken the downtrend line formed in mid-July. The pair may break the resistance again at 1.3240-45, with next resistance at 1.3316-66 and support at 1.2994.”