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Jan 16 - 09:55 AM

Goldman Sachs: Greater Upside for USD/CAD; Revising Targets Higher

By eFXdata  —  Jan 16 - 08:59 AM

Synopsis:

Goldman Sachs highlights upside risks for USD/CAD stemming from Canadian political uncertainty and tariff concerns, revising its forecasts upward to 1.46 for the next 3, 6, and 12 months.

Key Points:

  • Political Developments:
    • Prime Minister Trudeau’s resignation delays potential confidence votes and a general election until after March 24, creating a caretaker government in the interim.
    • This limits Canada’s ability to effectively counter tariff rhetoric from the Trump administration.
  • Tariff Risks:
    • Focused rhetoric from the US administration on Canada-specific tariffs continues to add pressure on CAD.
  • Policy Divergence:
    • The combination of tariff risks and diverging policy outlooks between the US and Canada supports further USD/CAD upside.
  • Revised Forecasts:
    • Goldman Sachs now projects USD/CAD at 1.46 in 3, 6, and 12 months, up from the previous flat forecast of 1.39.

Conclusion:

The delayed election timeline and heightened tariff risks strengthen Goldman Sachs' conviction in USD/CAD appreciation, with an updated 1-year target of 1.46.

Source:
Goldman Sachs Research/Market Commentary

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