The Canadian dollar has risen 3.2% against the US dollar last month, ING economists say. They note that the radical change earlier than expected by the Bank of Canada has forced them to update the profile for the USD / CAD, and now they expect a move below 1.20, reaching 1.16 by the end of the year.
Key statements:
“We expect the market to continue rewarding currencies (like CAD) with less dovish central banks to the detriment of currencies (like USD) that have been left unprotected by their central banks and are now at the mercy of rising inflation” .
“A strong economic rebound in the US and the sluggish Federal Reserve, despite spikes in inflation, are an ideal match for the CAD, allowing the currency to benefit from improving US demand. At the same time, enjoying the divergence of monetary policy with the BoC “.
“We expect USD / CAD to start trading sustainably below 1.20 in Q3 and we’re targeting 1.16 in the fourth quarter. “
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