USD/CAD: Declines in the Canadian dollar likely a buying opportunity – Wells Fargo
|Analysts at Wells Fargo forecast the USD/CAD at 1.2000 by the end of 2022. They hold a medium-term perspective positive for the loonie. They point out the GDP report recently released was not as soft as the headline suggested.
Key Quotes:
“While the news on the Canadian economy for Q2 was negative, we do not believe it was so negative as to alter the likely path of Canadian monetary policy.”
“We still expect the Bank of Canada to slow its government bond purchases further at its October announcement, and to begin raising interest rates in Q3-2022. A temporary period of Canadian dollar softness is possible given the recent subdued economy, political and COVID-related uncertainty, and as the U.S. Federal Reserve contemplates its own move towards tapering its bond purchases potentially by December this year.”
“The medium-term prognosis for the Canadian dollar remains favorable in our opinion—thus we would view declines in the Canadian dollar as more of a buying opportunity. “
“We do not view today's news as so negative to alter the likely path of Canadian monetary policy. We still expect the Bank of Canada to end its government bond purchases by early next year, and to begin raising interest rates from Q3-2022. We would view any declines in the Canadian dollar as more of a buying opportunity, and forecast the USD/CAD exchange rate at CAD1.2000 by the end of 2022.”
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.