Synopsis:

BNPP provides fair value projections for USD/CAD and AUD/USD using their CLEER™ model, anticipating higher values for both pairs by the end of 2024 due to differing economic factors.

Key Points:

• USD/CAD:

  • Current Value: Trades around its fair value of 1.38.
  • End-2024 Projection: Expected to rise to 1.40.
  • Reason for Revision: Upward revision due to expectations of stickier inflation in the US, leading to higher relative 2-year swap rates.

• AUD/USD:

  • Current Value: The AUD is considered cheap, currently trading below its fair value of 0.69.
  • End-2024 Projection: Projected to rise to 0.75.
  • Supportive Factors: More supportive interest rate spreads for AUD.

Conclusion:

BNPP's CLEER™ model projects a slight increase in USD/CAD to 1.40 by the end of 2024 due to persistent inflation and higher US swap rates. Meanwhile, AUD/USD is forecasted to rise to 0.75, driven by supportive interest rate spreads.