The Canadian dollar is still licking its wounds after the BOC’s dovish stance. What’s next? The team at CIBC sees big moves for the loonie.

Here is their view, courtesy of eFXnews:

CIBC Research argues that CAD is an attractive sell targeting a move in USD/CAD around 1.33 y end of Q1 of 2018.

“The Canadian dollar is still mispriced. Too many factors are pointing in unison to one direction—a lower loonie,” CIBC argues.

1- “First, the full cent drop in the currency following the Bank of Canada’s communication was highly predictable. It was an easy trade. And that trade is still very attractive….

2- In addition, when it comes to economic policy, the current level of expectation from Trump is basically zero…Therefore, any progress, or even perceived progress, on the corporate tax file could lead to a notable market reaction, benefiting US small caps and putting downwrd pressure on our currency…

3- The Canadian scene also provides some ammunition to that trade. For some odd reason the market is still attaching a 28% probability to a December move. That’s 28% too high..

4- And then we have NAFTA. It’s not going well, and for the first time, Canadian officials, including the Prime Minister, have expressed real concern about the possibility that the US will exit NAFTA,” CIBC argues.