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.
“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.”
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.