USD/CAD: CAD rally will stall late in 2018 - Scotiabank

Analysts at Scotiabank explained that they remain constructive on the outlook for the Canadian dollar (CAD) through 2018. 

Key Quotes:

"An earlier and more aggressive start to the Bank of Canada’s (BoC) tightening cycle had driven a rapid appreciation in the currency since the middle of the year but gains may now slow or even reverse modestly into year end.

From a seasonal point of view, the USD typically strengthens modestly in Q4 and early in Q1 before falling sharply. We anticipate one more rate increase this year and additional BoC tightening in 2018 as the economy improves, providing a key source of support for the CAD during a period of what we expect to be generally stable oil prices.

Our forecast implies, however, that the CAD rally will stall late in 2018 and reverse somewhat in the following year as currency appreciation may start to affect the external economy’s performance."