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Canadian Dollar Benefits From Oil Price Shock, Says Commerzbank

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After years of depreciation, higher oil prices are helping the Canadian dollar (CAD or loonie) to appreciate, said Commerzbank.

This is likely to be only a short-term rebound, however, unless the Canadian real economy recovers sustainably, thereby paving the way for interest rate hikes, writes the bank in a note to clients.

The CUSMA trade deal negotiations, which are due to begin in July, will further complicate matters, stated Commerzbank.

As a consequence, the bank continues to expect lower USD/CAD levels only in the second half of the year.

Commerzbank predicts USD/CAD to be 1.37 at the end of June, 1.36 at the end of September and 1.35 and end of December 2026.

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