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The Canadian dollar has remained firm in April, despite the collapse on oil prices and, according to the FX analysts at the National Bank of Canada, it may even appreciate in the mid-term, as the Fed’s QE program hits USD demand in the mid-term.

Key quotes

“The Fed’s open-ended QE program implies a bias towards further Canadian dollar appreciation. We have accordingly adjusted our near term USDCAD forecasts, expecting the cross to reach 1.36 by year end.”

“We’re not ruling out occasional bouts of C$ weakness especially if ugly Canadian economic data (still to come for March-May) get investors to price a more aggressive QE response from the Bank of Canada than is currently the case.”