Analysts from Danske Bank expect the Bank of Canada to keep their interest rate unchanged over the next 12 months. They forecast USD/CAD at 1.32 in a 1-month horizon.
“Over the past month, broad-based USD weakness has countered the positive spot impact of lower oil prices. At the latest monetary policy meeting, the Bank of Canada kept rates unchanged while signalling that the central bank expects to stay on hold. Meanwhile, as the US is by far the most important trading partner for Canada, Fed rate cuts on balance increase the probability of the Bank of Canada (BoC) easing; markets price roughly one cut in 12M.”
“For now, we stick to the call of unchanged rates over the next 12M, as the latest data releases out of Canada have kept up well while oil prices would benefit from a further weakening of the USD.”
“We lower the front-end of our profile to 1.32 in 1M (from 1.33) but leave our 3M, 6M and 12M forecasts unchanged at 1.31, 1.28 and 1.26, respectively.”
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