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The Canadian dollar is finally playing catch up to the broader risk sentiment recovery but the loonie still likely holds to a 1.30-1.35 range into year’s end, Westpac’s economists apprise. 

Key quotes

“Despite firmer energy prices and much better virus management than the US, the investment community continues to resist CAD, CFTC positioning showing specs still running sizeable CAD shorts at 30k contacts. That may well fuel some further near-term CAD upside, as will the persistently solid data run of late. While high-frequency mobility indicators show a levelling out in Canada’s recovery through August, traditional data continues to show the recovery gaining momentum.” 

“Yet USD/CAD should still hold in a 1.30-1.35 range into year’s end. Medium-term CAD outlook still constrained by the economy’s leverage to a virus-compromised US outlook.”