USDCAD: 1.38 high likely represents a peak of some significance - Scotiabank

Analysts at Scotiabank have upgraded their forecast for the Canadian dollar (CAD) quite significantly; they had expected the USD to crest at CAD1.40 in through mid-year but the 1.38 high seen in early May likely represents a peak of some significance for the USD now.

Key Quotes

“A major change in our broader forecasts supports a more constructive view on the CAD as we now expect the Bank of Canada (BoC) to start raising interest rates in the second half of this year (two increases in 2017) and to raise interest rates once more in 2018. A much earlier start and slightly more aggressive profile to anticipated BoC rate hikes will support the CAD in the next few months (and offset sluggish crude oil prices), we think. A narrowing in short-term US-Canada rate spreads has already supported a rebound in the CAD versus the USD and may have further room to compress. We now look for USDCAD to end 2017 at 1.28 (and we have adjusted the end 2018 forecast to 1.25).”