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- CAD to benefit from its status as commodity currency and active stance of the BoC – Commerzbank
CAD to benefit from its status as commodity currency and active stance of the BoC – Commerzbank
The loonie is having a hard time against the USD in the current market environment. Against the EUR, on the other hand, the CAD was able to gain noticeably as a commodity currency. Economists at Commerzbank expect a more pronounced downward movement in EUR/CAD than in USD/CAD in 2023.
EUR/CAD should trend lower in 2023
“In our main scenario, we continue to expect that the EUR will recover noticeably from the summer onwards, largely supported by the ECB's turnaround. As a result, EUR/CAD should drift upwards. At the same time, the CAD should be able to gain somewhat against the USD.”
“For USD/CAD, a key factor remains how the market views the BoC's stance compared to the Fed. If it is perceived as more hawkish and rate hike expectations change correspondingly, the loonie should benefit – conversely, it should lose accordingly.”
“With the continued tightening of monetary policy in 2023, the BoC is likely to differ from the ECB. We expect the latter to end its rate hike cycle again early in 2023, which should contribute to renewed EUR weakness. Accordingly, we expect a more pronounced downward movement in EUR/CAD than in USD/CAD in 2023.”
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