Markets still appear to be speculating on further declines in the Canadian dollar versus the US dollar but, after a 20% decline over the past 12 months, we believe that there is little scope for any additional weakness. Admittedly, oil prices could fall further, but this isn’t our central forecast. In addition, although Canada’s economic growth prospects don’t look good, we don’t expect CAD-US interest rate differentials to decline much further.
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