Usdcad To Move Higher In The Next Few Quarters

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Usdcad To Move Higher In The Next Few Quarters

NBF - USD/CAD To Target 1.45 In The Next Few Quarters

The USD/CAD has been on a downward trajectory as of late, which is a sign of appreciation for the Canadian dollar. However, the experts at the National Bank of Canada believe that it will not last for long. In fact, they have even given a forecast that sees the USD/CAD turn higher in 2024.

The NBF officials said that the Canadian Dollar (CAD) will remain weak until we reach the 2nd half of 2024. The reason for the CAD weakness is a slowdown of the global economy. In addition, the Canadian central bank is also highly likely to go full speed in regard to rate cuts.

Bank Of Canada To Move Towards Interest Rate Cuts

The bottom line is that the speed of rate cuts in Canada will be a lot higher than in the USA in 2024. This difference will enable the US Dollar to strengthen against its Canadian counterpart. Another thing that supports the NBF forecast is the weakness in the domestic demand faced by the Canadian economy.

That's why the NBF officials believe that the Canadian Dollar (CAD) will stay weak for the next 6-7 months. They have also set a target of 1.45 for the USD/CAD, which suggests the pair will likely gain 900+ pips in the next few quarters.

For now, the USD/CAD is trading near 1.34, which tells us that the target of 1.45 is really far away from the recent levels. It is only in the 2nd half of 2024 that the Canadian Dollar will start to see some demand once again.

An alternate scenario is that the Fed's speed of rate cuts may outperform the Bank of Canada. In this case, the funds will move towards the Canadian Dollar and will send the USD/CAD lower. In that case, there's a good chance that the pair will revisit the 1.30 and then the 1.29 handle, as they are important support levels.

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