BoC likely to begin tightening monetary policy in Q4 2016

As the year progresses, a pullback is likely in USD/CAD, on an expected stabilization after rebounce in crude oil prices, better performance in non resource sector.

Benefits of a weak CAD are likely to present a boost to growth with the exports and there are signs that most exchange rate sensitive sectors are performing well.

"Our economists look for the BoC to begin tightening monetary policy in Q4 2016, contributing to a pullback that takes USD/CAD to 1.33 at year end. We stress that the lack of a recovery in crude oil prices remains the most important risk to our CAD outlook", says RBC Capital Markets in a research note.