The Canadian dollar’s strength was part of Credit Suisse analysts’ Q2 forecast, and it remains so in Q3. The 1.2150 level has been established as the USD/CAD objective.
“Our USD/CAD objective has been raised from 1.1920 to 1.2150. We foresee a more domestic-driven tale in Q3 as CAD remains a pro-cyclical play on US growth and energy prices.”
“While the data supports the upward momentum in the United States, covid vaccines are moving at the quickest rate in G10. With limitations remaining in place across the country, reopening possibilities point to a possible increase in domestic demand in the third quarter.”
“Markets are pricing in a somewhat sooner rate hike (Q2 ’22) than the Bank of Canada’s projection (H2 ’22), but overall estimates appear to be reasonable. This should keep the 2-year interest rate differential between Canada and the United States solidly in CAD’s favor.”
“In May, the Bank of Canada’s balance sheet stopped contracting. We believe that a further reduction in asset purchases at the 14 July meeting is possible if the data holds up.”/n
