The Canadian Dollar has been trading sideways since the end of last year. Economists at Société Générale maintains a structural bearish bias for the USD/CAD pair.

Canadian and US inflation are now extremely close

“The correlation with oil prices is returning, and stabilising commodity markets have significantly reduced CAD volatility.”

“Bank of Canada monetary policy is tracking Fed decisions, which also limits the directionality of rates differentials, preventing USD/CAD from trending for now. As a result, Canadian and US inflation are now extremely close and on the same decelerating path.”

“This bias remains bearish USD/CAD, as the global soft landing supports risk assets, which is a positive CAD factor.”