USD/CAD unlikely to trade sustainably above 1.32 - Westpac
|According to Richard Franulovich, Head of FX Strategy at Westpac, USD/CAD unlikely to trade sustainably above 1.32 in coming weeks.
Key Quotes
“NAFTA 2.0 has lifted a considerable cloud over Canada and the BoC’s path on rates, the latter almost certain to hike Oct 24. That is heavily discounted with OIS pricing in a 92% probability but the BoC may well signal a faster pace of normalisation for 2019, nudging markets in the direction of four hikes (versus +50bp in 2017 and +75bp in 2018).”
“Markets have already reprofiled BoC expectations after the trade deal announcement but it has further to run with +65bp priced in for all of 2019.”
“Some pockets of weakness in the latest run of data including weaker PMIs, softer full-time employment and weak housing starts but the underlying growth profile remains healthy.”
“USD/CAD risks multi-week still skewed to lower levels.”
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