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- USD/CAD to fall to around 1.3% next year – SocGen
USD/CAD to fall to around 1.3% next year – SocGen
If the US Dollar weakens in general, it is likely to do so against the CAD, too, economists at Société Générale report.
Fed and BoC to ease monetary policy at a similar pace to each other
The biggest drivers of USD/CAD will probably be the general direction of the USD (which we expect to be weaker as US growth slows) and the relative shifts in Canadian and US longer-dated bond yields. A falling US yield environment and a weakening Dollar should drag USD/CAD lower in the absence of fresh new idiosyncratic drivers of the CAD.
In a not very imaginative forecast, we expect USD/CAD to fall to around 1.3% next year, as US yields fall (10s trading down to 3.75%) and the Fed and Bank of Canada ease monetary policy at a similar pace to each other.
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