USD/CAD to move below 1.26 – ING

Last week, the CAD had a strong performance, in line with other pro-cyclical currencies. On the first day of the new week, bears attack the 1.2600 level. Economists at ING Bank expect the USD/CAD pair to slide below this mark.  

Key quotes

“Idiosyncratic factors are contributing to put a floor below CAD: the improved outlook for the US economy (thanks to encouraging economic data and vaccination figures), on which Canada heavily relies on, and WTI staying around$60/bbl, despite Thursday’s short-lived sell-off. Considering those factors, adding the global recovery narrative and the USD facing fresh pressure, we think the time is ripe for USD/CAD to move below 1.2600 – a support that has so far held well. 

“This week, keep an eye on the speech by BoC Governor Tiff Macklem on Tuesday, although we suspect he will continue to send a Fed-like cautious message to the market in spite of the improved economic outlook.”