USD/CAD: Overvalued, to drop to 1.29 in six months – Danske Bank
|According to analysts from Danske Bank, the USD/CAD looks overvalued. They forecast the pair will move to the downside over the next twelve months.
Key Quotes:
“An improved global economic outlook, alongside higher oil prices, has contributed to a stronger Loonie. Meanwhile, the latest string of domestic data releases has generally disappointed, which keeps alive the possibility of a Bank of Canada rate cut in 2020. The 22 January meeting is very important for our view but, for now, we stick to our view of two rate cuts this year, while markets price slightly less than one. Fundamentally, we still regard USD/CAD as overvalued, with fair-value estimates in the low 1.20s.”
“We forecast USD/CAD at 1.32 in 1M, but keep rest of our forecast profile unchanged at 1.32 in 3M, 1.29 in 6M and 1.27 in 12M.”
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