USD/CAD: Downside oil risks and a more cautious BoC should weigh on the loonie – MUFG
|The outlook for the USD/CAD pair remains bullish in the short-term according to analysts at MUFG Bank. They see risks in the loonie and consider dollar’s sell-off will reverse its course. They warn that a continued rally in equity markets could help the Canadina dollar.
Key Quotes:
“The USD will reverse course going forward after the broad-based sell-off this week. Market expectations for dovish policy pivot are unlikely to intensify over the short-term despite the weaker than expected inflation data from the US. Fed comments since the data make that clear.”
“The near-term outlook for crude oil remains poor with the slowdown in global growth weighing more heavily on the price of oil. In addition, there have been numerous reports indicating Russia ability to remain a key supplier of crude oil which has left the supply-demand balance globally less supportive for crude oil prices.”
“We believe both of these developments should help to lift USD/CAD back towards the year to date high from last month at 1.3224. Unlike the US labour market, there have been clearer signs of a slowdown in hiring in Canada as well.”
“While we do not expect a sharp reversal in equity markets over the short-term, the scope for further gains is more limited now.”
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.