13 Jul 2015
USD/CAD to test 1.30 in 2016 – BAML
FXStreet (Edinburgh) - Analysts at BAML see the BoC ‘on-hold’ at its July meeting and the pair edging towards 1.30 in the longer run.
Key Quotes
“We see increasing risk of a BoC cut at next week’s (Wed) July meeting, but our base case remains that they will stay on hold, easing later in the year. The market has increasingly priced a hike, particularly following the much weaker-than-expected April GDP print which pushed our own Q2 GDP tracking to -0.6%”.
“This would put Canada in a technical recession and challenge Governor Poloz’s mantra of the front-loaded nature of the energy shock”.
“We still see USD/CAD gaining support this year as the BoC will cut in the coming meetings and continued oversupply in oil markets suggests oil will remain under pressure in the near term. We forecast USD/CAD rising to 1.30 in 2016, with the BoC on hold at 50bps for the entirety of 2016. The Fed, meanwhile, will likely begin hiking rates this year, and continue in 2016”.
Key Quotes
“We see increasing risk of a BoC cut at next week’s (Wed) July meeting, but our base case remains that they will stay on hold, easing later in the year. The market has increasingly priced a hike, particularly following the much weaker-than-expected April GDP print which pushed our own Q2 GDP tracking to -0.6%”.
“This would put Canada in a technical recession and challenge Governor Poloz’s mantra of the front-loaded nature of the energy shock”.
“We still see USD/CAD gaining support this year as the BoC will cut in the coming meetings and continued oversupply in oil markets suggests oil will remain under pressure in the near term. We forecast USD/CAD rising to 1.30 in 2016, with the BoC on hold at 50bps for the entirety of 2016. The Fed, meanwhile, will likely begin hiking rates this year, and continue in 2016”.