We believe CAD performance reflects the ongoing resilience of equity markets but suspect that we could soon see a correction to the downside which will increasingly weigh on CAD. History of CAD movement also indicates US recessionary conditions tend to result in CAD weakness. 

The strong inter-linkage for the Canadian economy means expectations of weaker growth in Canada will intensify, helping drag CAD lower.

Given the scale of drop in USD/CAD of late, we have altered our USD/CAD forecast profile to show a clearer path higher given our view of the limits of CAD strength from current levels.

USD/CAD – Q3 2023 1.31 Q4 2023 1.32 Q1 2024 1.34 Q2 2024 1.35