Most analysts think the BOC is currently on hold, with the bank-lending rate sitting at 2.5 percent. However, most forecasters see a potential tightening as early as the Sept. 7 BOC meeting, especially if faster growth numbers emerge. But given the overall gap between Canadian and U.S. rates, this differential should continue to act as a bearish factor for the Canadian dollar in the months ahead.

“The spread between short-term rates favors the U.S. dollar and it doesn’t look like the Fed will stop its tightening anytime soon,” Basile says.

His forecast for the U.S. fed funds rate is 4 percent by year-end, vs. a 3-percent Canadian bank rate.

“The rate spread has turned in favor of U.S. assets,” agrees Buskas. “Global investors looking for yield have turned to the U.S.”