USD/CAD SEEN PEAKING AT 1.42 IN EARLY 2024 – CIBC
Growing risks of divergence between the Fed and the BoC bring additional upside risk to USD/CAD in the coming quarters, economists at CIBC Capital Markets report.
USD/CAD seen ending next year at 1.35
We’ve compounded our forecast for Loonie weakness given the divergence in economic activity that the Canadian economy has seen versus US resilience, and we now see USD/CAD peaking at 1.42 in early 2024.
Canada’s heightened interest rate sensitivity and the deterioration in domestic demand will result in the BoC trimming interest rates a quarter ahead of the Fed, likely starting in Q2 2024. And a shallower path for USD depreciation next year on extended economic resilience leaves less room for loonie appreciation in H2 2024. As a result, we now see USD/CAD ending next year at 1.35, higher than our previous target.
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