USD/CAD To Reach 1.34s Region On Bullish Momentum - Scotiabank
The analysts at Scotiabank have come up with their latest forecast about the USD/CAD pair. According to them, the US Dollar & the Canadian Dollar pair appears to be all set to target the 1.34s range.
As for the exact price range, they said that it would be mid-1.34 or somewhere around the upper range of 1.34. Either way, the forecast for the USD/CAD is bullish!
If we look at the on-ground situation, it appears that USD is enjoying a period of strength after recent economic data. Based on that and the recent forecast by Scotiabank, it becomes clear that there's indeed upside room for the USD/CAD.
Canadian Dollar's Sentiment Is Weak
As for the Canadian Dollar (CAD), the commodities market has turned soft, and the risk sentiment is also weak. Both of these factors are pressuring the Canadian Dollar (CAD) and will also help the US Dollar gain the upper hand.
As per the Scotiabank analysts, the losses in the USD/CAD will remain limited, at least for the short term.
Looking ahead, some important data from Canada is due for releases, such as the Housing Starts (Jan), Manufacturing Sales (Dec), and existing home sales (Jan). If these data releases are soft, it will further pressurize the Canadian Dollar (CAD) and will take the USD/CAD towards the forecast range of 1.34x.
Considering how the Canadian Dollar (CAD) is so closely tied to the commodities market, it seems that there's more downside ahead for the Canadian currency. In addition, the current situation of the US Dollar is very strong due to its safe haven demand and higher interest rates set by the Fed.
In fact, more rate hikes are scheduled in the next meetings of the Fed. Based on the currently available information, we believe that the forecast shared by Scotiabank holds a lot of truth. However, we will have to wait for the upcoming data docket from the Canada to further test this theory.