CAD: Are Markets Wearing Rose Colored Glasses? Where To Target USD/CAD?

Feb 20, 2017 at 1:21 PM EST

It’s unlikely that the BoC moves this year, and a reduction in pricing should see CAD weaken in the months ahead.

The Canadian dollar is looking for a direction. Here is the view from CIBC:

Here is their view, courtesy of eFXnews:

The Canadian economy’s been looking a bit brighter recently. But are markets too optimistic about a BoC rate hike?

Hiring has been strong, but somehow hours worked have actually declined. The trade balance looks healthy in nominal terms, but a glance at volumes paints a drearier picture. And, this week, manufacturing shipments showed a healthy increase, but the gains were by no means broad-based and could be set for a reversal. Early indications suggest that January wasn’t a great month for transportation equipment shipments south of the border, and that’s often a good predictor of trends in that important sector in Canada.

All told, it’s unlikely that the BoC moves this year, and a reduction in pricing should see CAD weaken in the months ahead.

CIBC targets USD/CAD at 1.3400, 1.3600, 1.3900 by the end of Q1, Q2, and Q3 respectively.

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