MUFG Research discusses CAD outlook in light of the currency's recent decline into today's OPEC meeting.
"The Canadian dollar has remained under selling pressure during the Asian trading session with USD/CAD rising above the 1.3400 for the first time since June 2017. The next key technical resistance level now comes in at the 1.3500-level. The Canadian dollar has come under increased downward pressure in recent months undermined primarily by the plunge in the price of oil. Brent and WTI have both lost around a third of their value since early in October," MUFG notes.
"The Canadian dollar has become even more vulnerable to the risk of OPEC disappointment today as it would follow hot on the heels of yesterday’s dovish BoC policy shift. The BoC signalled similar to recent Fed commentary that they are likely to slow the pace of planned rate hikes in 2019 after delivering three hikes this year. The BoC still plans to raise rates to neutral territory which is currently judged between 2.5% and 3.5%, but is in less of a rush to get there than at their previous meeting from October. The dovish policy signal from the BoC has prompted the Canadian rate market to push back the likely timing of the next BoC rate hike from January to March of next year," MUFG adds.