The Canadian Dollar is expected to struggle in the near-term. Nonetheless, economists at ANZ Bank believe that the USD/CAD pair will turn back lower later in the year.

BoC’s pause will pay off

“If CPI continues to slip towards the BoC’s expectations of 2.6% YoY by year-end, the pause in the current monetary policy tightening cycle may bring about a rebound in broader economic data later in the year, leading to tailwinds for the CAD as the DXY declines and Oil prices rise as per our forecasts.”

“In the near term, CAD underperformance will continue, but we believe that USD/CAD will gradually fall to 1.29 by December this year.”