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Analysts at the National Bank of Canada see the USD/CAD pair rising to 1.46 during the second quarter and then falling to 1.43 in the third and to 1.41during the fourth.

Key Quotes:

“The Canadian dollar lost 6% against the USD in March, its worst monthly performance in five years. Granted, the economy is now in recession and GDP growth this year is set to be the worst ever recorded. But the U.S. is in a similar position.”

“Could the loonie lose more ground against the USD? That’s contingent on (you guessed it) the price of oil whose path in coming weeks will depend on whether or not producers can agree to curtail supply amid shrinking global demand. Seeing the devastation in America’s oil fields, even U.S. President Trump – who famously chided OPEC for not pumping enough oil ─ is now seeking production cuts from the cartel.”

“We still think oil price will remain grounded by this unprecedented global recession which, in the IMF’s estimation, will be “as bad if not worse” than the 2008/09 downturn. The downgrade to our 2020 forecasts for world GDP growth and OPEC/Russia price war prompted us to lower our projections for oil prices. WTI oil is now expected to average around $28/barrel this year (versus roughly $47 in our previous forecast). That translates to lower path for the Canadian dollar than anticipated earlier.”

“We now see USDCAD heading past 1.45 by midyear due to a combination of disastrous economic data and weak oil prices, before moving back down (i.e. C$ appreciation) later in the year as WTI recovers.”