USD/CAD: Policy divergence pummels the Loonie – MUFG

USD/CAD pushed higher and touched its strongest level since October at 1.3817. Economists at MUFG Bank expect the Loonie to remain under pressure.

Clear policy divergence lifting USD/CAD

“While we expect the US economy to slow more as well in response to higher rates it is happening with more of a lag that is opening up a widening policy divergence between the BoC and Fed in the near-term.”

“Short-term yield spreads between the US and Canada have hit fresh highs this week taking out the highs from late last year, and are placing further upward pressure on USD/CAD that has jumped from around 1.3600 to 1.3800.”