USD/CAD is trading comfortably above the 1.30 level. Nonetheless, economists at ING expect the pair to turn back lower and fall to levels below 1.25 in the first quarter of the next year.

Basis for a CAD recovery still intact

“There is still some room for a hawkish repricing in the BoC rate expectations and that can support CAD.”

“The loonie remains the most attractive commodity currency in the medium-term thanks to limited exposure to Europe and China as well as attractive carry.”

“We expect USD/CAD to return to sub-1.25 levels in 1Q23.”