Canadian dollar due for a temporary bounce

The Canadian dollar's sharp decline over the past few weeks seems a tad overdone and we wouldn't be surprised if it enjoyed a modest rebound over the coming month or so. As the incoming economic data confirm that Canada's economy grew just as strongly in the fourth quarter as it did in the third of last year, we would not be surprised if the currency returned close to US$0.94. Over the longer-term, however, we still stand by our long-held view that the Canadian dollar will slide to US$0.87.