USD/CAD remains stuck in a range below mid-1.2400s. But given the Bank of Canada’s policy stance, economists at the Bank of Montreal expect the pair to edge lower towards 1.20 by late 2022.

Moderation in energy prices to cap CAD upside potential

“The central bank's hawkish pivot and rising energy prices have put some wind under the Canadian dollar's wings.”

“We see the loonie cruising moderately higher to 1.20 by late 2022 as the Bank hikes rates ahead of the Fed, though an expected moderation in energy prices will cap its altitude.”