The rebound in the Dollar has taken USD/CAD back above the 1.34 mark. Economists at ING analyze the pair’s outlook.
BoC to follow Fed’s dovish turn
Incoming US data should continue to be a key driver for CAD in the crosses, given its high correlation with US economic sentiment.
The Bank of Canada meets on 24 January, and we see a high chance that it will follow the Fed in signalling rate cuts by year-end, thus dropping its tightening bias.
We remain unexcited about CAD’s prospects, and some benefits from residual resilience in US data may be offset by a more dovish BoC.
USD/CAD – 1M 1.35 3M 1.35 6M 1.33 12M 1.28
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