USD/CAD: The potential for Loonie softness looks relatively limited – Scotiabank

CAD rally stalls, losses should remain limited, in the view of economists at Scotiabank.

The Canadian economy remains relatively robust

For the first time since the start of June, factors may be pointing a little more clearly to the potential for some consolidation in recent gains. Still, the potential for CAD softness looks relatively limited. 

The CAD remains close to fair value and has been tracking factor inputs a bit more closely in the past couple of weeks. There is no obvious sign of misalignment in the CAD’s estimated fundamental fair value at this point. 

The Canadian economy remains relatively robust – in contrast to a backdrop of slowing global growth momentum as tighter monetary policy bears down on activity – and the potential for tighter BoC policy in July remains real.