Expected USD/CAD Range: 1.029 – 1.037 Update: Slightly weaker than expected growth figures in Canada and stronger than expected growth figures in the US have moved the loonie lower against the greenback. We continue to expect more volatility during the day as the markets await any additional color on the timing of “tapering” by the Fed 2 pm. The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have slowed notably. At the same time, the ongoing (admittedly halting) recovery in the US will sooner or later lead to a tapering of the Fed’s policies aimed at balance sheet expansion. Closer to home, Canada’s new central banker shows no inclination towards tightening in the near future. As a result of all of this and not surprisingly, the CAD has declined 5% relative to the USD since the beginning of the year. We expect the CAD to be even lower relative to its US counterpart by the end of the year.
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