USD/CAD could slip towards 1.28 in a year’s view – Danske Bank

Kristoffer Lomholt, Senior Analyst at Danske Bank, sees the pair dropping to the 1.2800 region within the next 12 months.

Key Quotes

“USD/CAD has moved sharply lower over the past few weeks, after reaching our previous 1M forecast. The move has been driven primarily by a broad-based setback in the USD. With the outlook for some USDrecovery near term, we think the cross will move higher in the coming month. We think the oil price will remain supported, which should limit the near-term downside potential for the ‘loonie’”.

“In the medium to longer run, we still expect the fundamentally overvalued USD/CAD to move lower, as the improved growth outlook and stabilising oil markets on balance work as a gravitating force on the cross. Also, positioning leaves room for bearish builds. We forecast USD/CAD at 1.33 in 1M (previously 1.35), 1.32 in 3M (1.34), 1.30 in 6M (1.30) and 1.28 in 12M (1.28)”.