The Canadian Dollar advanced in September which was notable given the broad US Dollar strength. Economists at MUFG Bank analyze Loonie’s outlook.
If US 10-year yields continue to drift higher the risk of an equity market correction will increase – if a correction unfolds, the risk of a spike in USD/CAD is high.
If the Fed hikes before year-end, the BoC could be in a position to limit the scale of increase in USD/CAD.
USD/CAD – Q4 2023 1.3600 Q1 2024 1.3400 Q2 2024 1.3300 Q3 2024 1.3200