USD/CAD: A break above 1.40 is on the cards – Westpac
|Canada is very vulnerable to the twin oil and coronavirus shock given great energy export dependence and leverage to the US. USD/CAD is up 5.8% year to date and looking very over-extended but with reasons to see a break above 1.40, economists at Westpac Institutional Bank apprise.
Key quotes
“A break of 1.40+ is still on the cards in the coming days as markets come to grips with the damage to Canada’s economy from the twin COVID-19 and oil shocks.”
“There’s a case for further meaningful downside in CAD merely to catch up to the substantial decline in energy prices/terms of trade.”
“Market pricing for the BoC is surprisingly not yet at their zero-bound; -75bp discounted by Oct 2020, putting their overnight rate at 0.50% vs 0.25% lows reached in 2009/10.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.