USD/CAD will be able to move below 1.30 in the first half of next year – ING
|Analyst at ING see the Canadian dollar (CAD) appreciating against the US dollar during the first half of 2020, even if the Bank of Canada cut rates. They see the USD/CAD pair at 1.30 in the first quarter of next year and at 1.27 by the end of the second quarter.
Key Quotes:
“The Canadian economy looks in good shape. However, trade tensions and concerns regarding the vulnerability of the country to global demand and commodity prices mean we suspect the Bank of Canada will step in with one last rate cut in early 2020. Despite this, fundamentals favour CAD over other currencies.”
“CAD is bound to retain the best risk-adjusted carry in the G10 space, even in a scenario with one or two BoC cuts. A stabilisation in risk sentiment should allow, in our view, commodity currencies to outperform in 2020 and we expect CAD to lead the pack as it should be able to cash in on its attractive carry.”
“On the external side, our commodities team is looking at more OPEC+ cuts in 2020 which should put a floor under oil prices. The long-awaited ratification of the USMCA may also add to the relative positives for CAD. All these factors lead us to believe that USD/CAD will be able to move below 1.30 in the first half of 2020, despite the prospect of BoC easing. We see the pair at 1.25 in 4Q20.”
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