Deutsche Bank Keeps Bearish View on Canadian Dollar Despite Positive Growth Outlook
MT newswire2026/10/07 10:4206:42 AM EDT, 10/07/2026 (MT Newswires) -- Deutsche Bank Research said it maintains a bearish Canadian dollar bias versus the Australian dollar, citing weak private-sector jobs, trade tensions and Bank of Canada rate-hike pricing despite improving growth and the country's strong external balance. "Developments in recent weeks haven't changed our view," wrote Deutsche Bank Macro Strategist Tim Baker in a Tuesday note. Growth remains resilient, with firm gross domestic product and retail sales and some improvement in private-sector jobs. However, Deutsche Bank sees BoC rate expectations as too hawkish, with markets pricing around 100 basis points of hikes despite core inflation holding near 2%. Slower population growth could also push the neutral rate lower, supporting lower Canadian dollar rates, said the bank. The 2027 outlook is more positive, with stronger international investment, rising energy capital expenditure, potential pipeline projects, airport privatization and more investment-friendly policies, added Deutsche Bank. Canadian pension funds also plan to increase domestic exposure, supporting a stronger medium-term investment and growth outlook after years of weak capex. The bank forecasts USD/CAD at CA$1.33 by end-2027 from today's CA$1.42, although it doesn't expect the downtrend to start immediately.
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