CAD Outlook Turns Bearish as Rate Gaps and Trade Risks Weigh

The Canadian dollar's outlook remains bearish in Q4 due to rate gaps and trade risks according to UBS. The Swiss bank's assessment comes as it forecasts a challenging environment for the CAD, weighed down by factors such as interest rate differentials and trade policy uncertainty.

UBS notes that the Canadian economy is facing headwinds from high household debt levels and an oversized housing market. These concerns have been exacerbated by rising interest rates in Canada, which are widening the gap with US rates. This divergence has led to a decline in the CAD's value against its American counterpart.