The Canadian Dollar has underperformed alongside the US Dollar this month. Economists at MUFG Bank analyze Loonie’s outlook.
Room for further BoC cuts to be priced into next year
Despite the relative resilience of the U.S. economy, the U.S. rate market is still pricing in around 0.2 points relative to the BoC by the end of next year. The Canadian rate market is currently pricing in a cut of around 75 bps, leaving room for further BoC cuts over the next year depending on the performance of the Canadian dollar going forward.
As a result, we expect USD/CAD to continue to trade in the high 1.3000’s.
