USD/CAD: Loonie to relax on the holidays and start to surge higher in 2022 – Scotiabank

The loonie reluctantly firms up on a supportive fundamental backdrop. Economists at Scotiabank expect the Canadian dollar to definitely start a race higher after the holidays.

Seasonal trends can make life a little tricky for the CAD

“The CAD has picked up a little support amid firmer stocks and steadier crude oil prices (reflecting weaker US crude stockpiles) but trade is very light and the CAD still looks somewhat undervalued relative to domestic fundamentals supportive, short-term yield spreads and positive terms of trade.”

“We do know that seasonal trends can make life a little tricky for the CAD around this time of year and into January so we will have to remain patient and look for USD gains to remain capped near recent range peaks around 1.2950 and a stronger CAD tone to emerge after the holidays.”