Balance of risks skewed to the upside – Danske Bank
According to analysts from Danske Bank, the risks in the USD/CAD pair are tilted to the upside, as they see a broad USD strength ahead. They forecast the pair at 1.29 in twelve months.
“Bank of Canada is increasingly guiding markets towards tighter monetary conditions in Canada via both lower bond purchases and higher policy rates in H2 2022. That said, the oil connection to the Canadian economy still leaves CAD vulnerable to global growth prospects and not least global manufacturing. Also with our expectations for broad USD strength, we think the balance of risk is skewed towards the topside for USD/CAD from current levels. Fundamentally, we still consider CAD to be a more USDdependent and less reflation sensitive version of NOK.”
“We forecast USD/CAD at 1.27 in 1M (from 1.26), 1.29 in 3M (from 1.26.), 1.32 in 6M (from 1.29) and 1.33 in 12M (from 1.29).”