CAD: A notable laggard amid USD weakness - Westpac

Sandeep Kanihama FXStreet Contributor

CAD remains a notable laggard amid sustained USD weakness, close to unchanged vs the USD 2018 YTD vs more meaningful gains for JPY (+5.3%), NZD (+3.9%) and EUR (3.7%), explains Richard Franulovich, Research Analyst at Westpac.

Key Quotes

“NAFTA renegotiation risks are seemingly a factor at play but that doesn’t gel with MXN ranking as the strongest G20 currency vs the USD YTD.”

“Canada has weathered +75bp in BoC hikes in six months without too much fuss, financial conditions have not tightened unduly either, a perennial concern for BoC officials (see over) and growth expectations in the US are solidifying amid stronger wages and very accommodative fiscal policy. OIS pricing for +44bp in BoC hikes by their Oct MPR is if anything on the light side.”

“CAD likely plays catch up to the solid story above at some point, USD/CAD more likely to test 1.20 on a 6 month horizon before 1.30.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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