USD/CAD: End-of-year target of 1.30 unchanged, but... - NBF
|Analysts at the National Bank of Canada explained that a further deterioration of the global economy, and corresponding oil price slump, represent the biggest downside risk for the loonie. But if, as they expect, policymakers in the US and China realize the cost of their dangerous policies and step back from the brink, investor sentiment about global growth will improve and may then be able to focus on positive developments in Canada.
Key Quotes:
“The Canadian economy is on the mend as evidenced by the strong handoff from March which signals an acceleration of growth in Q2. That, coupled with the removal of tariffs by the U.S. on steel and aluminum imports from Canada, should have given a lift to the Canadian dollar which instead continues to struggle amid investor concerns about global growth.
“Canadian exporters also stand to benefit from stronger U.S. imports in the second quarter after the Q1 purge stateside. If, as we expect, Q2 growth ends up being better than the 1.3% print the Bank of Canada is currently estimating, that would likely get markets to reduce any remaining expectations of rate cuts this year, boosting the Canadian dollar in the process.”
“While we’ve left unchanged our end-of-year target of 1.30 for USDCAD, expecting a U.S.-China trade deal to breathe new life into oil prices and hence the Canadian currency, we may have to revise that forecast if June’s G-20 meeting fails to alter the current toxic tone in trade negotiations between the U.S. and its trade partners.”
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.