Economists at CIBC Capital Markets expect the Canadian Dollar (CAD) to depreciate in the coming weeks before staging a comeback.

Final leg weaker before an appreciation

The Loonie has been retracing gains made late last year, and will likely continue to depreciate over the first quarter as markets recalibrate central bank rate expectations.

As markets reprice Fed and BoC expectations in opposite directions, we see USD/CAD drifting up to 1.3800 in early spring. Thereafter, broad USD weakness as the Fed prepares to start cutting rates should give the CAD a lift, and the Loonie will be boosted further in 2025 by a global pickup in demand and higher commodity prices