USD/CAD treads water around 1.3700. Economists at Citibank expect the pair to advance nicely towards 1.40 over the next months.

Bank of Canada approaching a pause

“Weaker economic data from Canada, a Fed that is determined to continue tightening into a global recession, and a BoC that is starting to back off will continue to weigh on CAD in the short-medium term, so we revise our 0-3m USD/CAD forecast to 1.40, but leave the 6-12m forecast unchanged at 1.31.”

“We have previously flagged the dovish risk posed to the BoC’s policy path from the recent slowdown in housing data, employment, and growth, and we are now closer to the point at which the BoC will pivot, or at least pause.”