The Canadian dollar has shown a lot of weakness lately. Will this continue? Here is the view from CIBC:
Here is their view, courtesy of eFXnews:
Oil prices have seen a pretty significant rebound from February’s lows. However, the upward move has had its fits and starts, and examining trends in the loonie during these different periods highlights a change in the Canadian dollar’s relationship with WTI.
Over the first two periods of WTI’s uptrend, the C$ outperformed other currencies and appreciated against the greenback. Given the close correlation between the loonie and oil, that’s not a great surprise.
But recently, the C$ has not only fallen against a rebounding US$ but also underperformed other currencies. That goes to show that even with oil prices recovering, domestic factors can bring C$ depreciation.
Look for the C$ to weaken further as Canadian data continues to disappoint.
CIBC targets USD/CAD at 1.37 by the end of Q3.Â
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