FXStreet reports that economists at the National Bank of Canada remain comfortable with the target of 1.20 for the USD/CAD pair in the second half of this year.

“We see little downside for commodity prices in coming months given the current backdrop and an accelerating vaccine rollout.”

“The long-awaited federal budget set for April 19 is expected to be very supportive of households and is likely to help formalize program spending. While it will not necessarily affect the Canadian dollar much, new or front-loaded spending could have some effect.” 

“The Bank of Canada’s Monetary Policy Report is set to be released April 21. We expect the BoC to announce further slowing of asset purchases. Though market participants have probably priced in this tapering, its formalization could lead to some swings.”

“Our model shows the Canadian dollar is still 6 cents undervalued against the USD . All in all, recent developments support our view of a CAD converging toward 1.20 to the USD in coming months.”