USD/CAD: The weakness in the CAD is likely to persist – HSBC

The loonie is likely to remain weak, in the opinion of analysts at HSBC. The USD/CAD pair is trading at 1.4106.

Key quotes

“According to our analysis based on Bloomberg data, correlations between USD/CAD against the S&P500 Index are somewhat higher than against oil prices over the last month and last quarter, but not materially so. In other words, the CAD is slightly more fixated on risk appetite than oil prices.”

“With G10 policy rates stuck at zero or below for the time being and most central banks engaging in asset purchases and balance sheet expansion of some kind, it is hard for individual cyclical stories to come to the fore for any currency, in our view.”

“We expect the weakness in the CAD to persist in the RORO world, alongside low oil prices.”