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Analysts have raised their forecasts on the high-flying commodity-linked Canadian dollar as a proposed infrastructure spending package in the United States bolsters prospects for the global economy, a Reuters poll showed.

The Canadian dollar has been the top performing Group of 10 currency this year, up about 5% against the U.S. dollar, supported by higher commodity prices and the Bank of Canada’s more hawkish stance.

On Tuesday, the currency touched its strongest level in six years at 1.2007 per U.S. dollar, or 83.28 U.S. cents. Analysts say 1.20 is a key technical level for the currency.

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The median forecast of nearly 40 strategists in the May 28-June 3 poll was for the currency to pull back around 0.6% over the next three months to 1.22 per U.S. dollar from about 1.21 on Thursday. But that is a stronger level than the 1.24 forecast in last month’s poll.

It was then expected to be at 1.21 in one year, versus 1.24 seen in May.

Commodity prices are likely to stay at higher levels as the global economic recovery unfolds, said Shaun Osborne, chief currency strategist at Scotiabank.

“You’ve got all the support that is expected to come from infrastructure spending in the U.S.,” Osborne added.

U.S. President Joe Biden has not given up on seeking as much as $1.7 trillion of infrastructure spending as he negotiates a deal with Republicans.

Canada is a major producer of commodities, including copper and oil. Crude on Thursday touched its highest level since October 2018 at $69.40 a barrel.

“Canada’s economic fundamentals will remain favorable,” said Simon Harvey, a senior FX market analyst at Monex Europe and Monex Canada. He recommends being long the Canadian dollar over a 12-month horizon.

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The Canadian economy likely contracted in April, the first decline in a year, due to widespread lockdowns amid a third wave of coronavirus infections, but economists say it’s in a good position to hit the Bank of Canada’s growth forecast of 6.5% for the year.

The BoC, which is due to make a policy decision on Wednesday, was expected to taper its bond purchases again in the third quarter, a separate Reuters poll showed. In April, it became the first major central bank to cut back on pandemic-era money-printing stimulus.

In contrast, Federal Reserve officials agreed at their last meeting to keep purchasing bonds at the current pace until there is substantial further progress toward the central bank’s goals for inflation and maximum employment.

“We still think the Bank (of Canada) continues to taper ahead of the Fed,” Osborne said. “We are still looking for a bit more strength in CAD in the second half of the year and into early 2022.”

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