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The recent USD/CAD downtrend might have reached a bottom, according to the FX analysis team at Rabobank that foresees a US dollar comeback on the H2 as Q3 and Q4 macro data emerges and the equity rally wears off.

 

Key quotes

“The market ignored Q2 macro data but it won’t ignore Q3 and Q4. If the best case transpires and risk remains bid, that does bode for more USD/CAD downside but the pace of the equity rally is likely to slow further out (don’t forget we have US-China tensions rising rapidly and the election coming up!) and the relationship between USD/CAD and equities will fade.”

“Downside from here is limited in my eyes and perfection will need to continue for a further leg lower but with so many risks around, I think we will see a floor in place close to current levels and I still think we trade above 1.36 as we head into Q3.”

“I think we’ll see another round of USD buying and USD/CAD will return north of 1.40 again heading into year-end.”

Expert score

5

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