Senior Analyst at Danske Bank Kristoffer Lomholt believes the pair could grind lower towards the critical 1.30 support in the medium term.
“The ‘loonie’ kept up fairly well with the March oil-price drop as stronger domestic data and a weaker USD countered the upward pressure on USD/CAD”.
“BoC’s downwards revision of potential output growth increases the probability of an early 2018 rate hike, even if our base case remains unchanged rates for the next 12M”.
“Irrespectively, we still see valuation as a strong argument favouring a lower USD/CAD even if the cross is likely to tread water near-term. We leave our USD/CAD forecasts unchanged at 1.31 in 3M, 1.30 in 6M and 1.28 in 12M”.