USD/CAD: Moderate Loonie recovery potential in the medium term – Commerzbank

At the beginning of August, the CAD again suffered in the wake of subdued market sentiment. Economists at Commerzbank analyze Loonie’s outlook.

CAD well supported from the BoC side

Despite recent weaker economic data and mixed signals from the labor market in recent months, we continue to expect a soft landing for the economy. Moreover, persistent wage pressures and stubbornly high core inflation argue for a continued active BoC.

We continue to see moderate CAD recovery potential against the USD in the medium term. The CAD should benefit if the interest rate differential between the Fed and the BoC narrows or turns positive in the medium term. 

EUR/CAD should reflect the interim EUR strength we expect.

Source: Commerzbank Research