A look at the near-term for USD/CAD
MUFG Research discusses USD/CAD outlook and sees a scope for a brief move back below 1.30 in the near-term.
"Stage is set for further CAD gains in the near-term. USD/CAD to fall back below 1.3000-level. Recent divergence in monetary policy expectations and cyclical momentum combined with the higher price of oil are strongly CAD positive," MUFG notes.
"While the near-term outlook for the Canadian dollar is strongly positive, we doubt that it will be sustained. Firstly, the Canadian and US economies are closely linked. Secondly, the BoC tends to follow the Fed closely when setting monetary policy. Thirdly, the price of oil may begin to come under more downward pressure in the year ahead if global growth continues to slow, and more seriously threaten one of the key foundations on which current Canadian dollar strength is built," MUFG adds.
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