A loonie coin rests on top of a U.S. dollar.

Don’t bet on the loonie diving to a record low last seen when PEOPLE magazine anointed Ben Affleck sexiest man of the year and Michael Jackson dangled his infant son off a hotel balcony, according to National Bank of Canada.

Strategist Sandra Kagango is pushing back on a recent bear call on Canada’s currency by David Wolf of Fidelity Investments Canada.

Last week, the former adviser to the Governor of the Bank of Canada told Bloomberg news that the nation may already be in a recession. He cited the unfortunate timing of Canadian households starting to deleverage amid weaker global growth in his prediction that the loonie will sink to US$0.62.

Kagango said while Wolf’s ominous bet that the Canadian dollar will retrace the lows of 2002 certainly caught the market’s attention, two of the currency’s fundamental drivers would need to “adversely shift” to prompt such dramatic depreciation.

“If the loonie is to test the record-low $0.62 handle as some have suggested, an oil price collapse would almost need to be a given, and so would a widening of the yield differential,” Kagango wrote in a research note on Thursday.

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West Texas Intermediate (WTI) futures are on track for a rise of more than 33 per cent over the January-March period, their biggest quarterly rise since 2009, thanks to OPEC production cuts and strong demand expectations. The May 19 contract climbed 1.26 per cent to $60.05 in New York at 10:43 a.m. ET.

Western Canadian Select, the main grade from Canada’s oil patch, has rallied to about $49 per barrel after trading as low as $12 late last year.

Kagano notes the loonie only dipped to 72 cents when WTI prices collapsed to $35 per barrel in 2015.

“Oil depreciating to such lows in the near-term is unlikely in our view,” she wrote. “Oil, if anything, is trending up not down against a tight supply backdrop.”

Kagango added the monetary policy climate does not indicate protracted loonie weakness, with the Bank of Canada sounding a more hawkish tone than the U.S. Federal Reserve.

“As for the yield differential, a recently dovish BoC was outdone by an even more dovish Fed, who have abandoned any 2019 rate hike plans (while whispers of a possible rate cut grow louder), leaving the BoC in a relatively more assertive position,” she wrote.

“While the market is unlikely to turn significantly bullish on the loonie until a meaningful BoC shift from the sidelines, and/or a compelling move in oil prices, we are far from the kind of CAD weakness we witnessed in 2002.”

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