Search ForexCrunch

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.

Key Quotes

“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.”