TD on the Canadian dollar in the new year:
We have been bearish CAD since mid-2022 on the basis that the higher rates go to fight inflation, the greater the downside macro shock associated with household debt servicing and hence the more the CAD will need to reflect it. That should intensify in the months ahead
- slowing global growth is likely to put a spotlight on Canada's energy trade balance, which has masked historical weakness in the non-energy trade balance
- after a resilient 2022, we see scope for broad CAD underperformance early next year
