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- USD/CAD to drop below the 1.2500 by the summer – ING
USD/CAD to drop below the 1.2500 by the summer – ING
Statement from the Bank of Canada (BoC) Governor Tiff Macklem will be crucial as markets brace for the BoC rate hike. Economists at ING expect the USD/CAD pair to edge lower to 1.2600 this week and extend its fall below 1.2500 by the summer.
Keep an eye on Macklem's comments
“Rate differentials continue to offer a bullish argument for the loonie, and markets are currently pricing in six BoC rate hikes in 2022. This may be a key topic in today’s Senate testimony by the BoC Governor Tiff Macklem, as policymakers may question whether the Bank is doing enough to fight inflation. Hawkish comments by Macklem may both consolidate markets’ view around six hikes in 2022 and fuel speculation about a 50bp move in March.”
“We could see CAD edge back to 1.2600 thanks to the supported environment for pro-cyclical currencies this week.”
“We think that the aggressive BoC tightening cycle will provide some substantial support to the loonie this year, and we expect a move below 1.25 by the summer.”
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