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17 Mar 2015
USD/CAD looking to stabilize in 12-m – Danske Bank
FXStreet (Edinburgh) - Analysts at Danske Bank believe the pair could stabilize in a 12-month horizon.
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”.
“Our call that the oil price has bottomed should eventually spur a turn in sentiment in the medium-term, but in the short-term the oil price will likely stay volatile, which could spill over to CAD”.
“The market is pricing close to another full 25bp cut from BoC, which we reckon will not materialize”.
“Since we expect the oil price to have bottomed, 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 stabilise 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”.
“Our call that the oil price has bottomed should eventually spur a turn in sentiment in the medium-term, but in the short-term the oil price will likely stay volatile, which could spill over to CAD”.
“The market is pricing close to another full 25bp cut from BoC, which we reckon will not materialize”.
“Since we expect the oil price to have bottomed, 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 stabilise again driven by an oil recovery and BoC retreating on the need for further easing”.