Given economic conditions on the ground and the near-term outlook, there is a risk that the monetary policy setting between the Bank of Canada and the Fed will diverge further, with the former pivoting to a relatively looser stance. This should keep the Loonie flying at a low altitude, but it will probably take even more pronounced weakness in Canada to see significantly more downside.

Our broader view is that the US Dollar will lose altitude in 2024 against most currencies as the turn in Fed policy comes more fully into view.