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Feb 03 - 01:24 PM

USD/CAD: Upside Risks To Persist N-Term - BofA

By eFXdata  —  Feb 03 - 10:15 AM

Bank of America Global Research discusses USD/CAD outlook and maintains a tactical bullish bias in Q1.

"We have been tactically bullish USD/CAD since January 8 and continue to view the balance of shorter-term risks as skewed to the upside. Canada's economic data have softened. The Bank of Canada has just sharply marked down 4Q growth estimates. Canada's economic underperformance relative to the US is therefore is likely to temporarily worsen, potentially substantially so. Accordingly, we think that CA rates are likely to outperform US rates and depreciation pressure on CAD will continue," BofA notes. 

"Our forecast remains for USD/CAD to average 1.32 in 1Q, implying some moderate overshooting of that level. How high the exchange rate reaches near-term is likely to be determined by incoming data and generalized global risk sentiment," BofA adds. 

Source:
BofA Global Research

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