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USD/CAD Macro Update

• Canada’s economy has slowed more in response to higher rates
• Inflation has been slowing but not as quickly as hoped
• BoC rate hike cycle has reached the end game
• Recession risks are currently higher in Canada
• Dovish repricing of BoC policy outlook weighing on CAD
• A lot of bad news is already priced into CAD
• USD is significantly overvalued relative to CAD
• External balances to encourage lower USD/CAD
• CAD to remain weak in near-term but strengthen beyond