Although it has recovered from some of its recent losses, the Loonie has performed disappointingly over the past month. Looking ahead, economists at the National Bank of Canada expect the CAD to outperform the USD in 2023.

Imminent pause by the Bank of Canada

“The improvement in inflationary trends sets the stage for an imminent pause by the BoC to assess the impact of previous rate hikes. Such a pause would certainly help allay fears of a recession and a prolonged period of house price deflation.”

“We sill see the possibility of a significant appreciation of the CAD against the greenback in 2023.”