Projections via Danske Bank for CAD:
- USD/CAD at 1.32 in one month (previous forecast was for 1.34)
- 1.33 in 3 mths (1.34)
- 1.35 in 6 mths (unchanged from prior forecast)
- 1.35 in 12 mths (also unchanged)
Citing:
- We generally like to consider USD/CAD as USD/NOK but with a lower beta to global risk sentiment and oil prices given the CAD’s close connection to the USD and the economies lower dependence on oil.
- Over the last months, broad USD weakness has more than offset the impact of higher oil prices leaving USD/NOK and USD/EUR relatively lower than USD/CAD.
- We expect this price relation to continue; i.e. broad USD weakness (or strength) should spill over to CAD in cross FX comparisons even if USD/CAD should be expected to move lower (higher).”
- Our call for a setback in EUR/USD suggest USD/CAD should move higher. The risk naturally is a continuation of reflation trade performance but for now, we decide on having a slight positive slope on the profile.
