Economists at Barclays expect the Canadian dollar to remain resilient on the back of fiscal support, higher oil prices and upbeat growth prospects. They forecast USD/CAD at 1.21 by the first quarter of the next year.
Key quotes
“We remain constructive on the loonie on the back of brighter growth prospects, extended domestic and external fiscal support, and higher oil prices.”
“The economy is proving to be more resilient than anticipated to the COVID-19 containment measures and the narrative of a more robust vaccine roll-out in H2 2021 alongside faster US and global growth implies a supportive backdrop for the currency.”
“We think Canada will be one of the main beneficiaries from international spillovers from President Biden’s stimulus plan, which adds up to the extended fiscal support measures by the Canadian government (which amount to roughly 3-4% of GDP over three years).”
“We significantly revise down our estimated path for the USD/CAD across the forecast horizon and now expect it to weaken towards 1.21 by the Q1 22.”
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