USD/CAD: BoC To Be Cautious In Letting CAD Appreciate
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USD/CAD: BoC To Be Cautious In Letting CAD Appreciate

The Canadian dollar has turned around after the huge gains, reacting negatively to bad news and ignoring good news. What’s next?

Here is their view, courtesy of eFXnews:

CIBC FX Strategy Research notes that the GDP growth in the US and Canada is always highly correlated so when they diverge, FX moves often help to bring growth rates closer together again.

“Based on policymakers’ own sensitivities to the moves in FX recently, alongside the turn to hiking by the BoC, are already large enough to see growth rates converge again. Our forecasts for 2018 differ from those achieved here because we see the Canadian economy being more sensitive to rate hikes than in the past, but also don’t expect the US economy to get a significant boost from a weaker currency,” CIBC adds.

“Either way though, this analysis suggests  another reason for the BoC to be cautious in letting the C$ appreciate further from here.

Indeed,  we actually see the C$ giving back some of its recent strength, with USD/CAD rising back to 1.30 by year-end,” CIBC argues.

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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.