The Bank of Canada (BoC) suspended its rate hike cycle for the second time in early September and has kept its key interest rate stable at 5% since then. At the same time, the Fed is discussing another rate hike. This difference in monetary policy is currently supporting USD/CAD. In the coming weeks, however, it is likely to become clear that there will be no further rate hikes in the US either.

As we expect a recession in the US next year, while the Canadian economy is likely to achieve a soft landing, we see CAD recovery potential next year.