2 Dec 2014
USD/CAD exhibits a downside risk – Nomura
FXStreet (Barcelona) - The Research Team at Nomura believe the the risk for the USD/CAD pair could be to the downside as a lot of negative news has already been priced in.
Key quotes
“A lot of negative news has been priced in following last week‟s OPEC decision not to cut production. As such, a slightly more hawkish statement could lead to a move lower in USD/CAD.”
“However, in the medium term, we believe that oil prices could decline further and stabilise at around $60 per barrel. This and further USD appreciation as rates markets start pricing in the first Fed hike should lead to further increase in USD/CAD, and we expect it to end the year at 1.15.”
“However, continued signs of positive spillover effects from the robust US economy and core inflation remaining high should keep the upside move limited.”
“Our base case for monetary policy remains that the BoC will likely stay on hold until the second half of 2015, likely hiking rates slightly after the Federal Reserve.”
Key quotes
“A lot of negative news has been priced in following last week‟s OPEC decision not to cut production. As such, a slightly more hawkish statement could lead to a move lower in USD/CAD.”
“However, in the medium term, we believe that oil prices could decline further and stabilise at around $60 per barrel. This and further USD appreciation as rates markets start pricing in the first Fed hike should lead to further increase in USD/CAD, and we expect it to end the year at 1.15.”
“However, continued signs of positive spillover effects from the robust US economy and core inflation remaining high should keep the upside move limited.”
“Our base case for monetary policy remains that the BoC will likely stay on hold until the second half of 2015, likely hiking rates slightly after the Federal Reserve.”