USD/CAD: Short-term target at 1.38 – NFB


Analysts at National Bank of Canada estimate the USD/CAD pair will trade at 1.38 in three months, at 1.36 in six and at 1.30 in twelve. They point out that weakness in equity markets is more likely to keep the US dollar on an upward trend over the coming weeks. 

Key Quotes:

“After falling to a multi-month low of 1.33 in June, USD/CAD is back above its 200-day moving average. This recent bout of weakness it not estranged to the rising geopolitical uncertainties (...) to which we must add the recent downgrade by Fitch for Government of Canada debt from AAA to AA+.”

“While it is clear that a reliance on foreign bond investors creates a vulnerability to the currency, it’s likewise important to recognize the importance of the Bank of Canada QE/CE programs, which not only help keep rates low/spreads tight (and thus debt affordable) but absorb much of the current surge in net federal and provincial borrowing that comes from unprecedented deficits. In other words, we do not perceive the Fit downgrade to be as lethal to the CAD as those that happened in the 1990s.” 

It is unfortunate that the Fitch downgrade occurred at a time when a potential dampening demand for oil because of tightening lockdown restrictions in some large US states because of COVID-19 cases. Also, we cannot ignore the fact that despite the new Canada-US-Mexico trade agreement, the US is contemplating imposing tariffs on Canadian aluminum. In light of all the above factors, we set our three-month target USD/CAD at 1.38.” 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD hovers around one-month low amid cautious markets

EUR/USD has been edging lower toward 1.2050, consolidating Friday's losses as the market mood is mixed. Upbeat Chinese GDP and US stimulus are cheering markets while Italy's political crisis and the depressing coronavirus picture is weighing on sentiment. 

EUR/USD News

GBP/USD fails to recover despite accelerated UK vaccine campaign

GBP/USD remains below 1.36, shrugging off the expansion of Britain's vaccination campaign. Post-Brexit talks on financial services continue while tension is mounting ahead of US President-elect Biden's inauguration. 

GBP/USD News

Gold struggles to capitalize on intraday bounce, up little around $1930-32

Gold struggled to capitalize on its goodish intraday bounce of nearly $40 and was last seen trading with modest gains, around the $1830-32 region.

Gold news

Forex Today: Dollar holds onto gains, shrugging off upbeat Chinese GDP, vaccine news eyed

Markets are mixed on "Blue Monday" with the dollar clinging to gains related to risk aversion, while upbeat Chinese growth partially offsets the gloom.Tension is mounting ahead of President-elect Biden's inauguration.

Read more

US Dollar Index: Immediately to the upside comes 91.00

DXY extends the march north and already trades at shouting distance from the 91.00 barrier, or new 2021 highs.

US Dollar Index News

Forex MAJORS

Cryptocurrencies

Signatures