Analysis team at National Bank Financial explains that the loonie’s woes continued during October with neither the USMCA trade deal nor the Bank of Canada’s hawkish signals able to offset risk off sentiment and weak Western Canada Select oil price.
Key Quotes
“We expect improvements on both of those fronts in the coming months with declining risk aversion (triggered perhaps by a slightly less protectionist Trump administration after the U.S. mid-term elections) and higher WCS prices (as inventories return to normal) giving a lift to the loonie.”
“Rate spreads could also improve further in the C$’s favour if the federal government delivers some stimulus in this month’s Fall Economic Statement. For now, we are keeping unchanged our forecast for USDCAD to reach 1.27 by year-end.”
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