USD/CAD: A relatively flat path – Rabobank

USD/CAD traded up to a high of 1.3899 on November 1. Despite the decline since those highs, Loonie was the second-worst performing currency in G10 FX, only underperforming USD. Economists at Rabobank analyze the pair’s outlook. 

US and Canadian monetary policy cycle to remain closely linked

We expect the US and Canadian monetary policy cycle to remain closely linked, providing somewhat limited direction for USD/CAD. 

However, we expect some retracement of the recent USD weakness and further upside for oil prices in the new year. These will likely counteract each other to an extent, and as such, we expect a relatively flat path for USD/CAD.