Strength in the Canadian dollar is likely to become more broad-based, says BCA Research in a research note.

“We have been bullish on the Canadian dollar versus the U.S. dollar for some time and expect further upside in the months ahead,” it says. In addition, BCA suggests that the Canadian dollar appears to be in the early stages of a rebound against many other currencies including the pound, the euro and the Australian dollar.

“The latter cross is noteworthy given the likelihood of a shift in relative interest-rate expectations in favor of the Canadian dollar,” it says. “Canadian core inflation is rising, while the Reserve Bank Australia just downgraded its inflation forecast in response to the recent dip in inflation. Moreover, we continue to expect oil prices to rise against other commodity prices, which should favor the Canadian dollar.”