Currency traders look past Bank of Canada decision to predict pain ahead for loonie

“Our bearish view for the second half 2023 remains predicated on the prospect that Canada will suffer a more severe slowdown than the U.S.,” said Thierry Wizman, global currencies and interest rate strategist at Macquarie Futures USA.

“The rise in rates has already happened and households will begin to feel the squeeze as fixed-rate mortgages are rolled over at higher rates,” Wizman said. “Until now, this effect has been delayed as banks try to extend durations on new mortgages to lighten the payment burden for households that are overly indebted. But this has its limits.”

Nomura International’s $1.37 target is similar. “U.S. economic resilience will ultimately adversely affect CAD,” strategists Jordan Rochester and Yusuke Miyairi wrote in a recent note. “The latest inflation print is unlikely to encourage the BOC to rush and deliver an additional hike in July,” they said.

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