It is not only commodity slowdown that is hampering CAD - a glimpse on fundamentals

Convincingly, Loony evidences a finishing touch to its mighty bull run in 2015 the same way as it took in the beginning of the year on the back foot majorly because of crude oil slumps.

Currently, USD/CAD trading to an 11-year high as crude oil prices forge a new cycle low below /bbl in the aftermath of OPEC failing to agree to new quotas at their December meeting.

However, we think it is not solely the crude that has caused currency depreciation, this is just to uphold the headwinds for the Canadian economy as we enter 2016, with GDP growth hampered by additional cuts to energy capital expenditures which in turn detract from business investment.

Recent data releases reinforce the headwinds, with the headline Q3 GDP print of 2.3% QoQ coming in below the BoC's estimate of 2.5% QoQ.

The data was characterized by a poor Sept monthly reading that sets the tone for a weak handoff to Q4 2015 (the level of output was nearly 1.1% annualized below the Q3 average).

Moreover, October's trade balance was the third weakest on record. Our monitoring for Q4 GDP has fallen to 1.3% QoQ from 2.1% QoQ.

This is below the BoC's 1.5% forecast. The bottom line is that weak commodity prices will continue to present a challenge to the Canadian growth outlook and weigh on CAD in Q1 2016.

Interest rate dynamics will also be at play into next year. We are looking for a series of quarterly 25bps hikes from the Fed in 2016 (ahead of market expectations).

We are revising our USD/CAD profile higher in the short-term (1.45 for end-Q1) with the risk that we trade higher intra-quarter or CAD recovers sooner if oil manages to stage a rally.