USD/CAD further pullbacks expected – Westpac

Strategists at Westpac believe the pair is headed towards lower levels in the next months.

Key Quotes

“Weakness in USD/CAD has further to go, a potentially higher March CPI next week thanks to stronger energy prices may well be a catalyst”.

“The backdrop continues to suit USD/CAD downside, the Fed unlikely to deliver any hawkish surprises until the data show a convincing recovery from a soft Q1, while improved growth momentum in China should last a few more months at least as fiscal and monetary accommodation there continues to feed into the economy”.

“It may not be obvious from the current price action but CAD longs might arguably find greater mileage owing CAD against the likes of AUD and NZD, rates markets in AU/NZ more consistently leaning toward pricing in rate cuts and given that oil prices seem more likely to sustain gains than iron ore, the latter showing substantially less progress on the supply-side adjustment front”.