FXStreet notes that the USD/CAD pair is seen trading higher over the coming years as economists at Danske Bank expect to see a stronger USD. Nonetheless, with the BoC set to hike rates, the CAD should limit its decline.
“In light of our expectations of a stronger USD and an eventual setback to reflation sensitive assets we therefore still pencil in a higher USD/CAD over the coming years.”
“Also with the latest move in relative rates we could see more support from markets pricing in forthcoming rate hikes from the Bank of Canada – which in turn should cap the topside.”
“We forecast USD/CAD at 1.26 in 1M (from 1.27), 1.29 in 3M (unchanged), 1.31 in 6M (from 1.32) and 1.33 in 12M (unchanged).”