Researchers at CIBC say the Canadian dollar will bottom against the US dollar in early 2016 while the British pound could push higher through the year.

The decline in the Canadian dollar has been protracted - the USDCAD has risen from 0.98 back in 2013, when the current period of CAD depreciation started, to 1.31 at the present.

The pound to Canadian dollar exchange rate has meanwhile risen from 1.52 in 2013 to the levels above 2.020 that we are witnessing now.

The end the CAD's trend lower could however be nigh.

One of Canada's leading institutions, CIBC, has told clients they see a turn in fortunes for the currency in early 2016.

While a powerful comeback is by no means predicted, what we are hearing is that the CAD could do enough to keep the likes of sterling and the US dollar at bay ahead of any potential rebound.

We are still months away from this turning point however and economic risks continue to be skewed toward the downside over the next couple of quarters.

"As a result of the ongoing weakness in commodity prices, both employment and capital spending in western Canada could come in weaker than expected. While federal fiscal stimulus could offset some of this, infrastructure spending is unlikely to begin until the second half of 2016," says a forecast note from CIBC.

It’s therefore likely that the loonie reaches its weakest level around Q1 2016 as the domestic economy proves it hasn’t fully healed from the oil price shock and the US movesm forward with its normalisation of monetary policy.

Look for USDCAD to hit 1.34 by the end of this year and 1.36 in Q1 2016.

"The tune will change, however, as we progress through 2016. The Fed will be tightening policy at an extremely gradual pace just as the Canadian economy begins reaping the full rewards of the weaker loonie," say CIBC.

In a rotation away from consumption, manufacturing and exports will lead the way to more balanced economic growth next year.

"The government is also likely to get in on the fun by starting its planned infrastructure spending in the second half of the year. Together, this will see the loonie gradually regain some of the ground it lost this year, reaching 1.28 versus the greenback by year end," says the currency forecast note.

The GBP to CAD conversion is meanwhile forecast to reach 2.07 at the start of 2016 before slipping towards 2.04 in mid-year trade. A decline by sterling towards 2.03 at year end suggests the Canadian dollar should retain the intitiative.