CIBC says there is scope for a further near term rally in the Canadian dollar (against the USD)
- After initially recovering with oil prices in January, CAD momentum has stalled even as WTI has grinded higher.
- Recent movements in the loonie have been driven more by interest rate expectations, or more specifically the lack of expectations. However, it's strange that even as the BoC has kept a bias toward hiking, while the FOMC hasn't, Canadian yields have actually fallen further.
- So while we now expect both the Fed and BoC to be on hold through the year, there could be some scope for a near term rally in the loonie as the US$ depreciates, albeit one that is reversed in 2020
