USD/CAD still eyes 1.34/1.35 – Westpac

In view of Richard Franulovich, Chief Currency Strategist at Westpac, USD/CAD could advance to the 1.34/1.35 area in the next months.

Key Quotes

“No change in our view: USD/CAD’s stalled push lower into the all important psychological 1.30 level suggests that a multi day bounce back toward 1.34-1.35 is in the offing”.

“Admittedly neither yield spreads nor crude oil are pointing decisively in favour of a solid rally in USD/CAD, but they are not signaling heightened risks of a break down through 1.3000 either”.

“The underlying background atmospherics favour a higher USD/CAD. Poloz will not jettison the BoC’s implicit easing bias as long as inflation continues to underwhelm and activity looks patchy (ex-energy exports were soggy in Jan and building permits fell a large 6.6%). That, and Trump’s ongoing threats to dismantle NAFTA point to medium term upside risks to USD/CAD”.