Usdcad Will Decline Scotiabank

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Usdcad Will Decline Scotiabank

Usd/Cad Will Decline To 1.2800 By End Of 2024 - Scotiabank

By the year 2023, the Canadian Dollar (CAD) had the upper hand against the greenback; however, that changed during early 2024 as the USD gained the upper hand again.

However, the situation will change again as Scotiabank forecasts the CAD to gain strength during Q2 and Q3 2024. According to Scotiabank, the primary reason for a bearish USD/CAD is the negative spreads between the two currencies.

Weak Commodity Prices To Drive Usd/Cad

They also added that the weakness in the commodity prices will also be reflected in the USD/CAD price action during the next few quarters.

In the short term, the USD/CAD will move towards 1.3500 - 1.3600 as the CAD is expected to show weakness. However, the situation will change starting from the Q2 and Q3.

During Q2/Q3, the CAD will turn positive against the USD and other major currencies. They added that an increased risk appetite, favouring currencies like this, would drive the strength in the CAD.

In 2025, the Fed will likely adopt a more fierce approach than the Bank of Canada (BoC) regarding the rate cuts. As a result, the CAD will appreciate against the USD.

So, for 2025, the Scotiabank analysts also hint at a bearish USD/CAD as the yield spreads will support the Canadian Dollar.

By the end of Q 2024, the USD/CAD will touch 1.3300, while the target for Q2 is set at 1.3300. The Scotiabank has also added that the pair will likely go down towards 1.2800 during the Q3 while the Q4 target is 1.2800.

For now, the USD/CAD is trading near 1.35, which means there's a 700 pips difference between the target and the current price. On the contrary, a dovish BoC and a still hawkish Fed could alter this scenario of the Scotiabank, sending the USD/CAD higher towards the 1.37, 1.39, and 1.40.

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