USD/CAD looks expensive above 1.35 - Westpac
|Richard Franulovich, Head of FX Strategy at Westpac, suggests that CAD is oddly weak despite a healthy domestic growth story and a BoC that has signaled yet more interest rate increases will be warranted in the future.
Key Quotes
“So far in July CAD has fared no better than EUR and has managed to eke out gains against just two other G10 peers – JPY and GBP - and in both cases it is more a case of independent weakness in the latter rather than outright CAD strength.”
“The sharp fall in oil prices (almost 10% from recent peaks) could be a factor. Admittedly the BoC is unlikely to fuel expectations for even more hikes than are currently priced in (+40bp by end of Q1 2019) either, trade tensions seem certain to build and Chinese growth is slowing.”
“USD/CAD likely has a tough time breaking down sustainably through 1.3000 near term, but by the same token USD/CAD looks expensive above 1.35.”
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