FXStreet notes that the Canadian dollar, after a difficult week in the run-up to the U.S. election, has regained all the ground it lost against the greenback and is trading near its pre-pandemic level of about 1.30 to the USD. An easing of protectionist tensions between Washington and its allies coupled with the imminence of a new vaccine means that the Canadian dollar will strengthen sooner than that envisioned in the National Bank of Canada’s previous baseline scenario, which assumed vaccine availability in the second half of 2021. 

“The Canadian domestic economy is likely to remain well-supported by generous fiscal stimulus and by the increase in immigration quotas announced by Ottawa on the 30th of October in support of the recovery.”

“The better-than-expected performance of the Canadian economy, coupled with the easing of financial stress, led the Bank of Canada to recalibrate its QE asset-purchase program to $4 billion a week from $5 billion a week. With this backdrop and the good news on the vaccine front, we see the CAD strengthening more than previously anticipated in the months ahead.”

“Our new target is $1.25 to the USD in 2021.”