Thursday, March 9, 2017 1:44 AM EDT
The Canadian dollar is struggling with the tumbling price of oil. What’s next?
Here is their view, courtesy of eFXnews:
In our view, USD/CAD will be dominated by the trend in the ‘big dollar’ over the coming months. This is because Canadian domestic data has little impact on Canadian rates at the moment and because we do not expect much momentum in oil prices. The recent uptick in USD/CAD corrects some of the current undervaluation. We expect 2Y rate differentials to widen further by around 30bp by Q317 as the market prices in further Fed hikes. This should drive USD/CAD to 1.38, or slightly below the peak of 1.40 that we have been forecasting previously.
One reason to expect a slightly less weak CAD is that US stimulus expectations have subsided recently. Our economists do not expect fiscal stimulus to materialise until 2018, and it appears that some of the more USD-positive aspects of the tax reform, such as the border adjustment tax, are becoming more questionable. We also see limits to how much the Canadian policy rate can lag behind its US counterpart given the positive correlation between the Canadian and US economic cycles.
Disclaimer: Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, ...
more
Disclaimer: Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, risk appetite and the trader's level of experience should be carefully weighed before entering the Forex market. There is always a possibility of losing some or all of your initial investment / deposit, so you should not invest money which you cannot afford to lose. The high risk that is involved with currency trading must be known to you. Please ask for advice from an independent financial advisor before entering this market. Any comments made on Forex Crunch or on other sites that have received permission to republish the content originating on Forex Crunch reflect the opinions of the individual authors and do not necessarily represent the opinions of any of Forex Crunch's authorized authors. Forex Crunch has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: Omissions and errors may occur. Any news, analysis, opinion, price quote or any other information contained on Forex Crunch and permitted re-published content should be taken as general market commentary. This is by no means investment advice. Forex Crunch will not accept liability for any damage, loss, including without limitation to, any profit or loss, which may either arise directly or indirectly from use of such information.
less
How did you like this article? Let us know so we can better customize your reading experience.