While being buffeted by a stronger USD earlier in the quarter, the CAD has rallied as the Bank of Canada (BoC) resumed rate hikes. Economists at ANZ Bank analyze Loonie's outlook.

The BoC is likely not finished with monetary policy tightening

With the economy holding up well, the BoC is likely not finished with monetary policy tightening. This means that the Canadian Dollar can outperform –  particularly as the US Fed’s tightening cycle winds down. 

We see USD/CAD reaching 1.29 by year-end.