USD/CAD likely to test at 1.33 by end-2016

A pull back is likely in USD/CAD as the year progresses, on an expected stabilization then crude oil prices rebound and better performance in non resource sector.

Weaker CAD benefits are likely to present a boost to the growth with exports and there are indications that most exchange rate sensitive sectors are already performing well.

Fiscal stimulus is not incorporated into these forecasts as there was no budget yet, but this should be an upside risk to 2.2% growth forecast.

"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.