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Analysts at Citibank continue to look for the WTI barrel to reach $50 by year-end and $60 in 2021 in their base case; such a scenario would favor the Canadian dollar. They forecast USD/CAD at 1.30 in 0-3 months and at 1.27 in 6-12 months. 

Key Quotes:

“We expect risk sentiment to be an important driver, but also think CAD has fundamental supports. Canada is the only G10 country with positive economic surprises and data momentum. Citi forecasts an extended rebound in oil from here with WTI at 56$/bbl in 12m. This should be supportive for the Loonie.”

“Canada is the only G10 country with positive economic surprises and data momentum. This should continue to be supported by new fiscal measures earlier, which have reinforced that the government is willing to put in place any and all necessary measures for the recovery.”

“USD/CAD failed to penetrate 1.3421 level several times and it becomes the pivot resistance. Interim resistance may find at 100MA of 1.3392 and Sep 9 top of 1.3260, with supports at 1.2952-1.2994 and 1.2782.”