CAD seen higher medium term – Danske Bank
|Analyst Kristoffer Lomholt at Danske Bank sees the Canadian currency appreciating further in the medium term.
Key Quotes
“As widely expected, the Bank of Canada kept the policy rate unchanged at 0.5% at the September meeting. Surprisingly, the BoC twisted its language on the balance of risk for inflation from ‘roughly balanced’ (in July) to ‘tilted somewhat to the downside’. We – alongside markets – still expect BoC to leave rates unchanged for the next 12M”.
“Near-term a stronger USD and a setback in oil prices could send the cross temporarily higher. In the medium- to longer run we still expect the fundamentally undervalued ‘loonie’ to appreciate gradually on the back of valuation and a gradually higher oil price”.
“We lift our USD/CAD forecasts to 1.33 in 1M (from 1.32) and 1.31 in 3M (1.30). We leave the 6M and 12M projections unchanged”.
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