The loonie is struggling to stand up to USD in the current environment. Although the Bank of Canada (BoC) could accelerate its rate hikes over the coming months, this is unlikely to lift the CAD, economists at Commerzbank report.

Hawkish signals from the Fed to drive USD/CAD further upwards again

“Hawkish signals from the Federal Reserve cannot be excluded. This would drive USD/CAD further upwards again, at least on a short-term basis.”

“When the Canadian labour market report is due on Friday the market is likely to have more or less digested the Fed meeting. If the data were to illustrate that the situation on the labour market is tighter than expected, and if this leads to a stronger rise in wage indicators, this is likely to fuel expectations of accelerated BoC rate hikes. Even though a lot seems to have been priced in already the loonie is likely to benefit at least short-term.”