The Canadian dollar was on the back foot due to wobbling oil prices and some pressure from the Bank of Canada. What’s next?

Here is their view, courtesy of eFXnews:

The BoC has expressed concern regarding a strengthening C$ before, however those references in 2015/16 occurred when the loonie was at or stronger than 80 cents (USDCAD 1.25).

Last week’s statement took aim at the strengthening of the C$ versus other currencies. Despite the loonie being little changed against the US$ since the previous MPR, it was up almost 6% against a basket of other currencies. That’s particularly important given that a re-working of the Bank’s Foreign Activity Index, designed to better track actual exports, raised the weights of other countries and downgraded the US.

With the suggestion that a rate cut is still on the table as well, we expect the loonie to depreciate against a range of currencies and USDCAD to hit 1.39 in six months.