USD/CAD to plunge towards 1.2260, big week ahead for the loonie – Credit Suisse

Economists at Credit Suisse remain bullish on the loonie ahead of next week’s fiscal budget announcement on 19 April and of the BoC’s interest rate decision on 21 April and hold a 1.2260 USD/CAD target.

The Bank of Canada is unlikely to push back 

“We see COVID-19 and lockdown-related risks to the growth outlook as limited for now, and partially offset by the prospect of additional fiscal spending.”

“Bank of Canada may announce a very gradual plan to reduce asset purchases: we think this would add to the already ongoing reduction in balance sheet growth, with positive implications for CAD.”

“Our view on CAD is constructive, with a 1.2260 USD/CAD target over a three-month horizon, and is based mainly on expectations of beneficial growth spillover from US fiscal stimulus.”