USD/CAD: Loonie’s prospects unexcited – ING

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