Economists at Commerzbank see further limited CAD recovery potential against the USD.

Hawkish BoC supports the CAD

“The CAD is benefiting from the hawkish BoC rhetoric, especially since the Fed also appears to be at the end of the rate hike cycle. We see further limited CAD recovery potential against the USD given the robust economy. In this context, the CAD should benefit if the gap in interest rate expectations for the Fed and BoC narrows further or sustainably turns positive.”

“In a risk-averse environment, however, the CAD should find it difficult to hold its ground against the USD, which is favored as a safe haven. A risk to our forecasts therefore remains a further smoldering uncertainty after the financial market turmoil in March.”

Source: Commerzbank Research