Analyst at Danske Bank, forecast the USD/CAD pair will move higher in the months ahead, targeting 1.33 in three months and 1.35 in six months.
Key Quotes:
“We generally like to consider USD/CAD as USD/NOK but with a lower beta to global risk sentiment and oil prices given the CAD’s close connection to the USD and the economies lower dependence on oil. Over the last months, broad USD weakness has more than offset the impact of higher oil prices leaving USD/NOK and USD/EUR relatively lower than USD/CAD. We expect this price relation to continue; i.e. broad USD weakness (or strength) should spill over to CAD in cross FX comparisons even if USD/CAD should be expected to move lower (higher).”
“Our call for a setback in EUR/USD suggest USD/CAD should move higher. The risk naturally is a continuation of reflation trade performance but for now, we decide on having a slight positive slope on the profile. We forecast USD/CAD at 1.32 in 1M (from 1.34), 1.33 in 3M (1.34), 1.35 in 6M (unchanged) and 1.35 in 12M (unchanged).”
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