Economists at Scotiabank continue to see merits in the longer-run outlook for the Canadian dollar. They expect the USD/CAD to tank towards the 1.20 level by the end of the year.
Potential gains in the CAD versus both the EUR and JPY where yields are poised to stay low
“We expect relatively firm commodity prices (energy) to help underpin the CAD.”
“Our interest rate forecast anticipates the BoC matching the Fed in terms of policy tightening this year but tightening more than the Fed in 2023 (50bps vs 25bps) – and we are more confident that the BoC delivers on these expectations.”
“The CAD should benefit from supportive term yield spreads against the USD and find gains against the low or lower-yielding currencies (e.g. the EUR and JPY) easier to come by.”
“We spot initial support at 1.23 below the market and resistance at 1.2810/15 ahead of 1.2950.”
“We forecast a year-end rate of 1.20 for USD/CAD versus the Bloomberg consensus of 1.24.”
