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 US economy, the US rate market is still pricing in around 0.2 points of further cuts than the BoC by the end of next year. With the Canadian rate market currently pricing in around 75 bps of cuts, it leaves room for further BoC cuts to be priced into next year which should remain a weight on Canadian Dollar performance going forward.
As a result, we expect USD/CAD to continue to trade in the high 1.3000’s.
Source: https://www.fxstreet.com/news/usd-cad-to-continue-to-trade-in-the-high-130s-mufg-202311221149