USD/CAD could easily surpass the 1.40 level – TDS

The outlook for the loonie is bleak. USD/CAD rallied to 1.3977 after hotter-than-expected US inflation data and could break above the 1.40 mark, economists at TD Securities report.

Dips into 1.3800/50 are a buy

“Even if the next phase of USD strength is not as linear as it has been for much of this year, there is a lot of negative idiosyncratic risk coming the CAD's way with the debt servicing problem for households only in the early days.”

“While we have forecast 1.40 into year-end, it is no ceiling and it could very easily get worse for the CAD.”

“Dips into 1.3800/50 are a buy.”