Forex Flash: Growth shocks in US unlikely to trigger downside for CAD – UBS

Canada's key export sectors - manufacturing and energy - are not enjoying the best of demand conditions, and given the heavy exposure to the US, any growth shocks arising from sequestration in the US would be strongly felt by the Canadian labor market. Canada's current account - although at manageable levels - is struggling to recover and this serves as an immediate deterrent to longer-term investors.

As such, “it would probably take more time and data confirmation for such trends to materialize, and we do not expect them to serve as valid triggers for CAD downside on a tactical level.” notes Research Analyst Gareth Berry at UBS.