04:58 PM EDT, 10/01/2024 (MT Newswires) -- "Neither rain, nor snow, nor weak oil prices and negative rate differentials are causing the Canadian dollar to stray too far from its sideways path, and we expect more of the same over the upcoming quarters," said CIBC duo Avery Shenfeld and Katherine Judge.

At this point, they noted, with the Fed also on board with significant rate cuts, and like the Bank of Canada, still early in that process, markets aren't going to be as sensitive to which central bank's turn is next, and whether an individual move was 50 or 25 basis points. "In any event, our end point for overnight rates in Canada (2.25%) and the US (3.38%) doesn't materially change interest differentials from where they've been of late," they added.

On oil prices, the CIBC duo said they are likely to recover some lost ground next year as rate cuts reduce global recession risks, but not to levels where they would expect a huge lift to Canadian growth from energy sector capital spending. Meanwhile, the US is itself now a significant oil producer, so the differences versus Canada in a rising oil environment aren't what they once were, they noted.

Shenfeld and Judge said: "That leaves Canada as a low-beta follower of the overall direction of other major currencies versus the greenback. We look for a modestly stronger loonie in 2025 as the US dollar sheds some of what it gained by being a carry recipient. US fiscal and trade policies could alter that view post the US election, but at this point, there's too much uncertainty about who will take the White House, the make-up of Congress, or which Presidential campaign pledges would actually see the light of day, to factor that in to any significant degree."