Weaker-than-expected US inflation data has alleviated Fed tightening pressure, supporting a near-term recovery for the Canadian Dollar. Scotiabank expects a narrowing policy gap between the Fed and the Bank of Canada to strengthen the CAD further.
Key Takeaways
- 1.Weaker than expected US inflation data for June is easing concerns over Fed tightening, providing relief to the CAD.
- 2.Scotiabank anticipates a significant narrowing of the Fed/BoC policy gap by early 2027, supporting medium-term CAD strength.
Table of Contents
- Narrower Front-End Spreads Lift CAD
- Narrower Swap Spread Lifts CAD
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Authors
Shaun OsborneEric Theoret
Securities
USDCAD
Themes
Inflation DynamicsMonetary Policy Divergence
Regions
North AmericaUnited StatesCanada