CAD is gaining some support from stronger oil prices, but Morgan Stanley believes that this could be limited over the longer term.
"The REER still requires adjustment in order to make the economy more competitive. While the dependence on the oil sector is lower than in Norway, CAD could still get hit from a weaker banking sector affected by loans made to the oil sector," MS argues.
"We do note that Canada should benefit from growth in the US economy, but look for larger dips to buy USDCAD," MS advises.
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