USD/CAD showing tentative signs of topping out - Westpac

Sandeep Kanihama FXStreet Contributor

According to Richard Franulovich, Research Analyst at Westpac, USD/CAD is showing tentative signs of topping out near 1.2500 but with the BoC now on the sidelines with its datadependent posture, the better part of USD/CAD’s bigger decline in the last six months is mostly complete, for the time being.

Key Quotes

“Recent BoC commentary suggests only a very slim chance of a hike when they meet Oct 25. That shouldn’t upset markets with just a 20% chance of a hike priced in for that meeting.”

“Further out, markets price in 50bp in hikes by mid-2018. That seems entirely reasonable – PM Trudeau’s 2016 fiscal stimulus is still washing through the economy, US prospects are firming amid very easy financial conditions while oil prices are holding near multi-month highs. USD/CAD should wash about in a 1.23-1.26 range into year’s end before potentially resuming its downtrend as US tax cut fever hits political snags and the BoC resumes rate hikes.”

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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