USD/CAD to trend lower in medium term

17 August, 2018

According to Richard Franulovich, Head of FX Strategy at Westpac, CAD is a casualty like AUD of rising EM risks via weaker global growth and lower terms of trade but a solid domestic growth story insulates the currency.

“Currency markets appear to appreciate that with CAD a relative outperformer; only CHF and JPY have proven more resilient vs the USD over the last 1 and 3 months.”

“Markets are mostly braced for a Oct 24 BoC hike, pricing in an 80% probability, but thereafter expectations look too light, just one additional follow up hike priced over the subsequent seven months to late April.”

“Yet NAFTA talks are gaining momentum with promising signs of an “agreement in principle” soon as the US hones its trade ire to China rather than on multiple fronts, and the local data continues to paint a fairly robust growth story.”

“USD/CAD likely to trend lower medium term.”


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