A stable Canadian economy and recent comments by Bank of Canada management speak in favor of acquiring the loonie, Wells Fargo strategists say.

They predict that the USD/CAD pair will drop to the level of 1.3200 by the end of this year, and it will fall to the level of 1.2800 by the end of the first quarter of 2020.

BoC Chairman Stephen Poloz's comments last week turned out to be more hawkish.

The head of the Canadian central bank said that monetary policy is in the right place. Therefore, Wells Fargo canceled its forecast for interest rate cuts by the BoC by 25 basis points.

At the same time, investors still expect the BoC to lower its interest rate in December, and the Federal Reserve in January. The market lays such expectations in quotes.

If the Canadian central bank leaves the interest rate at the current level, then expectations will change in favor of the Canadian dollar.

"Economic imbalances in the Canadian economy are weakening. This is especially noticeable in the real estate market. Ratification of the new trade agreement between the US, Canada and Mexico should also help strengthen the Canadian currency," Wells Fargo believes.