USD/CAD: More consolidation - Westpac

Richard Franulovich, head of FX strategy at Westpac, suggests that the USD/CAD’s sharp New Year decline has given way to a more consolidative picture and the 1.31-1.33 operational range is in play at the moment.

Key Quotes

“The bigger picture narrative underscores ongoing downside potential for USD/CAD into 2019. Crude oil is in a mild uptrend, a patient and flexible Fed is on hold through to mid-2019 while the BoC has an ongoing, albeit watered down and data-dependent tightening bias.”

“Markets continue to adopt a fairly relaxed stance on the potential BoC hikes in 2019.”

“USD/CAD a sell into strength and likely to outperform its dollar bloc cousins AUD and NZD, the BoC’s tightening bias a stark contrast to both the RBA and the RBNZ’s more balanced approach that explicitly includes the possibility of rate cuts.”