FXStreet (Córdoba) - Analysts from Brown Brothers Harriman explain the factors behind the recent recovery of the Canadian dollar and why it might be over. Key Quotes: “First, the Canadian economy contraction that persisted through the first part of the year ended with renewed growth in June and July. Investors understood this as an indication that the Bank of Canada's two rate cuts this year likely completes the mini-easing cycle.” “Second, the Federal Reserve delayed the rate hike that appeared to have been signaled for September.” “Third, as a consequence of these first two drivers, the interest rate premium the US pays over Canada for two-year borrowing has fallen from 30 bp in mid-September to 8 bp now. The Canadian dollar is sensitive to the interest rate different differential.” “Fourth, is the bounce in oil prices, especially over the past four sessions. “ “The Canadian dollar recovery may be over. The US dollar approached the retracement objective from the rally off the June 18 low near CAD1.2130. Oil prices are reversing lower. A move above $1.3100 would lend credence to our suspicions. It would signal a move toward CAD1.3160 and then CAD1.3200 initially.” “The Canadian economy may have stopped contracting, but it is still being adversely impacted by the negative terms of trade shock. “Lastly, the national election is on October 19, and the race looks like a virtual dead heat. This raises some degree of political uncertainty that should keep the budding bulls in check.” For more information, read our latest forex news.