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Analysts have raised their forecasts for the Canadian dollar, expecting Canada’s economy to benefit from fiscal stimulus and higher oil prices but after a 10-month rally the currency is set for a period of consolidation, a Reuters poll showed.

The median forecast of 40 analysts in the Jan. 4-7 poll was for the loonie to trade at 1.27 per U.S. dollar, or 78.74 U.S. cents, in three months. That’s up from the 1.30 forecast in December’s poll, but slightly weaker than its current level of 1.2680.

It was also seen at 1.27 in six months, while gaining 1.4% to 1.25 in one year.

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On Wednesday, the Canadian dollar touched its strongest intraday level since April 2018 at 1.2626. It has strengthened around 16% since March along with broader weakness for the U.S. dollar. “When the USD falls aggressively, it tends to move in that same direction against everything,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.

“Canada shares some of the U.S.’s negative fundamentals with its own current account deficit, massive QE (quantitative easing) and massive fiscal deficit, but those issues are comparatively smaller for Canada,” Anderson said.

The Bank of Canada’s balance sheet has more-than quadrupled since March to about C$550 billion ($434 billion) after it launched a large-scale bond buying program for the first time.

In November, Ottawa forecast the budget deficit hitting an historic C$382 billion, about 16% of GDP, on COVID-19 emergency aid, with another C$100 billion in stimulus set to be rolled out once the virus is under control.

Canada’s economic outlook has been bolstered by “significant fiscal stimulus and likely further increases in oil prices as global industrial production continues to climb and travel slowly recovers,” said Erik Nelson, a currency strategist at Wells Fargo.

The price of oil, one of Canada’s major exports, has soared more than 50% from its November low, boosted by Saudi Arabia’s pledge to cut additional output and hopes that the global economy will rebound as COVID-19 vaccines roll out.

Canada was among the first countries to administer the vaccine developed by Pfizer Inc and German partner BioNTech SE.

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Still, the worsening of a second wave of the coronavirus has led to some Canadian provinces tightening economic and social restrictions. On Wednesday, Quebec announced an 8 p.m. curfew beginning on Saturday.

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