Yesterday, Bank of Canada governor Poloz told that an appropriate path for rates is very difficult to know because of a number of unknowns around outlook. He also assured the Bank would not be mechanical in policy approach since economy may act differently than in previous cycles.
That said, the regulator expresses more cautiousness now.
CAD, which has been growing for at least 5 months, is like a pain in the neck for the . A strong currency may cause problems for the export activity and weight in on the economic growth. So, the regulator will try to discourage CAD.
Under these scenario, we expect USD/CAD to struggle in the range of 1.2470-1.2510. This has been quite a strong area since mid-July. In case of a breakout, the next target will be the 1.26 level.