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20 Aug 2015
USD/CAD further upside lies ahead – Danske Bank
FXStreet (Edinburgh) - Senior Analyst at Danske Bank Christin Tuxen believes another leg higher in the pair could unfold in the next months.
Key Quotes
“The January and July cuts show that the BoC has no problem easing monetary policy at a time when the Fed is moving in the opposite direction”.
“The lower level of oil prices is taking its toll on the Canadian economy and if we are right in projecting another BoC cut this autumn at a time when the Fed delivers a first rate hike, CAD should stay under pressure. This suggests that USD/CAD should see another leg higher in coming months”.
“On a 12M horizon we nevertheless project that USD/CAD will stabilise again driven by an eventual but gradual oil recovery and the BoC staying on hold in 2016. We have upped our full USD/CAD profile following a significant downward revision to our oil-price profile through 2016 as the (cost-determined) equilibrium oil price is seen as low as USD65/bbl”.
Key Quotes
“The January and July cuts show that the BoC has no problem easing monetary policy at a time when the Fed is moving in the opposite direction”.
“The lower level of oil prices is taking its toll on the Canadian economy and if we are right in projecting another BoC cut this autumn at a time when the Fed delivers a first rate hike, CAD should stay under pressure. This suggests that USD/CAD should see another leg higher in coming months”.
“On a 12M horizon we nevertheless project that USD/CAD will stabilise again driven by an eventual but gradual oil recovery and the BoC staying on hold in 2016. We have upped our full USD/CAD profile following a significant downward revision to our oil-price profile through 2016 as the (cost-determined) equilibrium oil price is seen as low as USD65/bbl”.