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Prospects & Targets For CAD Into 2016 – Soc Gen

The Canadian dollar was certainly not a winner in 2015. A lot has to do with oil.  What lies ahead for the loonie?

The team at SocGen weighs in:

Here is their view, courtesy of eFXnews:

The outlook for the Canadian dollar (CAD) into mid-2016 is for further depreciation against the US dollar, but likely outperformance against other G10 commodity currencies, projects SocGen.

“The Canadian dollar has been heavily affected by movements in crude oil prices in recent years. There has been an average correlation of -0.55 on USD/CAD spot versus WTI front-month prices year-to-date, using daily two-month rolling correlation.

Our commodity strategists expect crude oil prices to stabilise at current levels and trade sideways until mid-2016, so CAD will not be getting a lift from oil in the next few months,” SocGen argues.

USDCAD crude oil link November 2015

The Bank of Canada will also lag the Fed in raising rates. The Liberal victory in the Canadian federal elections should result in a small fiscal boost to growth. The Liberals promised increased infrastructure spending and a more redistributive tax system, and that should boost growth marginally over the next two years,” SocGen adds.

This implies that USD/CAD should rise further in coming months, to 1.35 by mid-2016 in our view. CAD however should outperform the likes of AUD and NZD on the back of the Fed lift-off in H1 2016,” SocGen projects.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.