The loonie has lost some feathers since the beginning of the year. Despite the uncertainty created by the latest COVID-19 variant, analysts at the National Bank of Canada remain comfortable with their current forecast of USD/CAD 1.20 in 2022.

BoC to outpace the Fed

“With headline CPI inflation approaching 5%, the current backdrop remains favourable for a Bank of Canada rate hike in March.”

“We expect the BoC to outpace the Fed by 5 to 4 in terms of rate hikes this year to end the year at 1.50% (vs. 1.25% in the US.).”

“Despite the uncertainty created by the latest COVID variant, we remain comfortable with our current forecast of a CAD1.20 rate for the US dollar in 2022.”