A Scotiabank economist believes that while the Canadian dollar rally stalls, losses will be limited.
The prospects for some consolidation of recent gains appear a little more clear for the first time since the beginning of June. It appears, however, that there is relatively little potential for CAD softening.
Since the beginning of the year, the CAD has remained close to fair value and has been tracking factor inputs quite closely. As of this writing, the estimated fundamental fair value of the CAD does not appear to be misaligned.
It is still possible for the Bank of Canada to tighten policy in July - despite a backdrop of slower global growth momentum as tighter monetary policy has a negative impact on the market.
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