Lee Hardman, Currency Analyst at MUFG, suggests that the sharp rebound in the Canada dollar in recent months has complicated the outlook for BoC monetary policy by significantly tightening monetary conditions. Key Quotes “After hitting an intra-day high of 1.4690 on the 20th January, USD/CAD has fallen sharply towards support from its 200-day moving average at around the 1.3300-level. The Canadian dollar is likely to find it more of a struggle to advance further in the near-term. We already believe that Canadian dollar strength has overshot in the near-term with USD/CAD closer to levels between September and October when the price of crude oil was trading closer to USD45-50/barrel. As a result the Canadian dollar could prove sensitive to any comments regarding its recent strengthening at today’s BoC policy meeting. The need for further BoC easing has diminished in the near-term alongside the rebound in the price of crude oil and evidence that the Canadian economy is performing better than expected early this year.” For more information, read our latest forex news.