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The Bank of Canada (BoC) delivered another dose of stimulus. The details send a clear message in how the market should view the CAD, according to economists at TD Securities.

Key quotes

“We are very bearish on the CAD for reasons related to the terms of trade shock, the ripple effects this will have from bankruptcies to lost incomes, and the structural imbalances of the economy (from trade to household debt).”

“USD/CAD will inevitably trade higher. We are resolute in this view. Dips in USD/CAD sub-1.40 are false dawns and when liquidity permits, should be used to accumulate to existing positions.” 

“USD/CAD runs cheap on our HFFV estimate; we target 1.4650.”