What is the outlook for USD/CAD in 2021?
Here is their view, courtesy of eFXdata:
Bank of America Global Research discusses USD/CAD outlook and targets the pair at 1.26 in 1Q, rising to 1.29 in 3Q, reflecting BofA’s view that undershooting is set to reverse as 1H plays out.
“We see limited downside potential in USD/CAD from current levels. The broader USD has declined back to equilibrium. Oil prices have risen above our commodities research team‘s forecast of $47 for 2021. Global risk assets have already to a large extent priced in global recovery,” BofA notes.
“Most importantly, as 2021 plays out, US vs. CA fundamentals look unlikely to deteriorate particularly on the back of large fiscal expansion in the US, which should keep USD/CAD fair value supported near our current estimate of around 1.29. In fact, our expectation is for US-CA rate differentials to rise, provided that oil prices prove contained despite ongoing recovery. Further USD/CAD undershoot looks unjustified, rendering dips in USD/CAD unsustainable,” BofA adds.
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