Canadian figures have been encouraging, but the Canadian dollar has not really enjoyed the fruits. What’s going on? Here is the view from CIBC:

Here is their view, courtesy of eFXnews:

CIBC FX Strategy Research notes that the turnaround in Canada’s economy over the past six months or so has been pretty impressive, as Canadian GDP growth appears to be accelerating above the OECD average again.

Yet, CIBC notes that CAD has been an underperformer recently and is the only major currency down against the USD on a year-to-date basis.

“Sure, some softness in oil and CPI this week has contributed. But the BoC’s still cautious take on the economy and concern regarding the trade-weighted strength of the currency earlier in the year has been an underlying theme,” CIBC argues.

As such, CIBC expect the CAD to remain an underperformer until the BoC gets closer to rate hikes in early 2018. 

In line with this view, CIBC targets USD/CAD at 1.35 by the end of Q2, and 1.36 by the end of Q3. Further ahead, CIBC targets USD/CAD at 1.33 by the end of Q1 of 2018. 

USD/CAD is trading circa 1.3480 as of writing.

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