USD/CAD to return to the upper end of the 1.33-1.38 range in the second half of 2023 – NBF

FXStreet Insights Team FXStreet

The Canadian Dollar was the fifth best performing major currency against the USD in the first half of 2023. Economists at the National Bank of Canada analyze USD/CAD outlook.

H2 unlikely to be as good as H1

One of the main drivers of CAD appreciation in the first half of the year was the significant tightening of Canada-US interest rate differentials. With inflation trending down faster on this side of the border, it is very unlikely that the BoC will want to outpace the Fed on potential summer hikes.

After its recent strength, our model suggests that the USD/CAD is now slightly overvalued.

Looking ahead, we expect USD/CAD to return to the upper end of the 1.33-1.38 range in the second half of 2023 as the global economy shows tangible signs of weakness.

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD weakens below 1.1650 as strong US data boosts Fed hold outlook

EUR/USD extends its losses for the third consecutive session, trading around 1.1640 during the Asian hours on Thursday. The pair loses ground as the US Dollar advances as a stronger-than-expected United States Producer Price Index and Retail Sales, along with last week’s easing Unemployment Rate, reinforced the case for the US Federal Reserve to keep interest rates on hold for the coming months.

GBP/USD holds above 1.3400 after UK GDP data

GBP/USD holds above 1.3400 in European trading, fading a spike to near 1.3450. The pair jumped on the upbeat UK growth and industrial data but failed to hold the uptick amid a broadly firmer US Dollar. The focus now turns to the mid-tier US data releases for further directives.

Gold remains near $4,600 due to Fed rate pause bets, easing tensions

Gold loses ground after hitting a fresh record high of $4,643 in the previous session, trading around $4,600. The non-interest-bearing Gold lost ground as a stronger-than-expected United States Producer Price Index and Retail Sales, along with last week’s easing Unemployment Rate, reinforced the case for the US Federal Reserve to keep interest rates on hold for the coming months.