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USD/CAD Macro Update
- Canada’s economy has slowed more in response to higher rates
- Inflation has been slowing but not as quickly as hoped
- BoC rate hike cycle has reached the end game
- Recession risks are currently higher in Canada
- Dovish repricing of BoC policy outlook weighing on CAD
- A lot of bad news is already priced into CAD
- USD is significantly overvalued relative to CAD
- External balances to encourage lower USD/CAD
- CAD to remain weak in near-term but strengthen beyond