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In their weekly strategy report, analysts at Citibank forecast the USD/CAD will trade around 1.33 in a 0-3M period and around 1.31 in 6-12M. They see the Loonie gaining support in the short-term as markets  priced in an unlikely rate cut from the Bank of Canada.

Key Quotes:

“Remain moderately bullish. BoC Governor Poloz heavily emphasizes downside risks from trade while remaining quite upbeat on the economy, saying (1) the slowdown is likely to prove temporary; (2) the future outlook remains positive; and (3) rates till more likely to go up than down if forecasts are right. While now not the base case, we may not rule out the potential for future rate hikes.”

“USDCAD has broken through the 1.3270/90-1.3400/20 range to the topside. But with Canadian short rates pricing in rate cuts from the BoC that is highly unlikely, CAD should start to find better support at the current levels.”