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