USD/CAD to hover around a 1.23-1.27 range in April – Mizuho

The USD/CAD pair continued trading around 1.26 in March. In April, the loonie is broadly expected to move in a 1.23-1.27 range, as reported by Mizuho Bank.

Canadian economy to see a recovery 

“The Canadian government is expecting vaccines to lead to herd immunity in Canada sometime around September, with the economy expected to recover to pre-pandemic levels as COVID-19 is controlled and vaccines are rolled out.”

“Investors have essentially priced in a recovery in crude oil demand on the global economic recovery, with WTI expected to move in a range between $55–65/barrel going forward. WTI could fall at times on headlines related to covid, crude oil inventories and crude oil supply structures, with the USD/CAD pair topping 1.27, but the Canadian dollar will also remain bullish on robust Canadian economic indicators and QE tapering, so the pair will probably trade in a range from 1.23-1.27.”

“The CAD/JPY yen pair looks set to basically trade in a range between 86-89. The Canadian unit is also likely to be pushed higher as Canadian long-term interest rates continue rising and the differential with Japanese long-term interest rates widens.”