20 Feb 2015
USD/CAD faces upside pressure in H1 – Danske Bank
FXStreet (Edinburgh) - The prospects of an early rate hike by the Fed will support further upside in the pair, suggested Christin Tuxen, Senior Analyst at Danske Bank.
Key Quotes
“Canada’s economy is caught between an improving US economy and the drop in the oil price. The Canadian economy is holding up reasonably well but downside risks prevail”.
“We expect Bank of Canada to stay on hold in the near future as the oil price starts to tick higher and the US recovery gains traction”.
“The market is pricing almost another full 25bps cut from BoC, which we reckon will not materialize”.
“Provided we are correct in seeing the oil price bottoming out in Q1, CAD downside should be limited from here”.
“Still, we look for the Fed to hike early, which suggests that USD/CAD should see another leg higher mid year. On a 12M horizon we nevertheless project that USD/CAD will head lower again driven by an oil recovery and BoC retreating on the need for further easing”.
Key Quotes
“Canada’s economy is caught between an improving US economy and the drop in the oil price. The Canadian economy is holding up reasonably well but downside risks prevail”.
“We expect Bank of Canada to stay on hold in the near future as the oil price starts to tick higher and the US recovery gains traction”.
“The market is pricing almost another full 25bps cut from BoC, which we reckon will not materialize”.
“Provided we are correct in seeing the oil price bottoming out in Q1, CAD downside should be limited from here”.
“Still, we look for the Fed to hike early, which suggests that USD/CAD should see another leg higher mid year. On a 12M horizon we nevertheless project that USD/CAD will head lower again driven by an oil recovery and BoC retreating on the need for further easing”.