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Commodities' weakness to exert a little more pressure on the CAD - TD Securities

FXStreet (Łódź) - Shaun Osborne, Chief FX Strategist at TD Securities sees some headwinds for the CAD due to the expected further severe pressure on commodities in the months ahead.

Key quotes

"(Pressure would be exerted) through the usual channel of (likely stronger) correlated relationships, as the CAD/crude relationship is back to the 'sweet spot' of more tightly correlated movement."

"Falling prices amid slack Asian and European growth and rising supply may also hamper investment in Canada’s oil patch where domestic heavy oil has to compete with rising supplies of lighter blends from US-based producers."

"This may further hamper the long-awaited rotation away from domestic-demand led growth in Canada to the more sustainable drivers of trade and investment that the BoC views as crucial to returning the economy to full capacity over the next couple of years."

"Other things equal, this would also weigh on the currency, both directly via weaker investment inflows, and indirectly via a relatively more gradual tightening of the monetary policy stance."

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