The Canadian dollar has bounced around since the U.S. presidential election as economic growth has shown positive signs but inflation continues to disappoint the Bank of Canada (BoC). It sold off initially after the Fed raised rates in December, but rallied back strongly after year end. The BoC stated at its January meeting that rate cuts are still a possibility, but it will likely wait until more clarity is available on U.S. fiscal and trade policy before taking action. The Canadian dollar remains overvalued, in our view, but will likely trade within a range in the near term.
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