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USD/CAD to rise over the subsequent months on Fed tightening – Danske Financial institution


The dollar will rise versus the Canadian greenback within the coming months based on analysts at Danske Financial institution. They forecast USD/CAD at 1.30 in three months and at 1.32 in six months and 1.32 in twelve months. 

Key Quotes: 

“We consider that CAD on a longer-term strategic foundation will face help from elevated commodity costs and rising demand for getting inflation safety – which Canadian markets ship. In the meantime, short-term we’re nonetheless fearful that world recession dangers may result in a setback to danger and by extension additionally ship a success to danger delicate belongings incl. CAD. Given CAD’s shut connection to the USD and the US economic system, the Canadian foreign money is healthier protected than most different growth-sensitive currencies – but we nonetheless see topside to USD/CAD in our base case.”

“Financial institution of Canada persevering with its tightening cycle will in isolation act as a supportive issue for CAD vs most different currencies however not vs the USD as we count on the Fed to ship extra tightening. We now forecast USD/CAD at 1.26 in 1M (from 1.28), 1.30 in 3M (from 1.31), 1.32 in 6M (1.35) and 1.32 in 12M (1.35).”

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