USD/CAD continues to trade heavily – Westpac

USD/CAD continues to trade heavily, but it’s mostly a USD story, according to Richard Franulovich, Research Analyst at Westpac.

Key Quotes

“Year to date CAD has seen the smallest gains vs the USD in the G10. USD/CAD can plumb new lows amid a broad weak USD trend (1.20 more likely before 1.30), but continuing caution on CAD crosses is warranted a while longer.”

“The prospect of a quick BoC follow up hike appears distant, the Bank signaling a more relaxed data dependent stance last week. The next likely date for a hike is probably their MPR meeting April 18 (i.e. when fresh forecasts are produced and NAFTA risks are clarified), a good three months away.”

“Trade/NAFTA risks continue to intensify too, the Trump admin clearly pivoting to trade in 2018 now that tax has been dealt with. Against that backdrop CAD probably underperforms on cross near term though USD/CAD can continue its steady decline.”