USD/CAD: Loonie punching above its weight - BTMU

Analysts at Bank of Tokyo Mistshubishi explained that, finally, the Canadian dollar is what we would say is “punching well above its weight”.

Key Quotes:

"It’s the fourth best performing G10 currency this year (yes, oil is a key factor) but unlike Norway it has the third worst external position in G10 with a current account deficit of 3.4% of GDP. Add to that a real yield level (-1.50%) that is also the third worst and we see grounds to argue some CAD under-performance ahead. If the euphoria over this crude oil production freeze deal was to fade in the coming days, we would expect to see that reflected first and foremost in renewed CAD selling.

Furthermore, our internal CAD valuation estimate suggests ample scope for some renewed depreciation from current levels over the coming months."