Falling oil prices have weakened Canada’s economic prospects with weaker oil
sector investment the next shoe to drop, in our view. The market has partly priced
in further rate cuts from the BoC. Due to Canada’s asset prices running at lower
overvalued levels relative to Australia, the country is better positioned to be able to
cut rates without fearing misallocating capital. We view the EUR as an asset
currency, as long as funding flows and long-term capital exports from EMU remain
subdued due to increasing EM uncertainty
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