Canadian Dollar's Recovery Depends on Fed Expectations, U.S. Trade Relations, Commerzbank Says
A "significant" appreciation of the Canadian dollar against the US dollar is unlikely to take place until there's a Federal Reserve repricing or progress in trade relations with the U.S., according to Commerzbank in a note Monday. "Lower USD-CAD levels are unlikely to materialize until then," wrote Commerzbank Foreign Exchange Analyst Michael Pfister in the note. The US dollar to Canadian dollar's move back above 1.41 appears to reflect broader market drivers rather than recent domestic developments, with oil price expectations and overall US dollar strength playing a larger role, added the bank. A renewed escalation in the Iran conflict could push oil prices higher and provide near-term support for the Canadian dollar, as Canada is a major oil exporter, said Commerzbank. However, a strong loonie gain against the greenback requires repricing of Fed interest rate hikes or, "ideally," an extension of the U.S.-Mexico-Canada Agreement on trade.
A "significant" appreciation of the Canadian dollar against the US dollar is unlikely to take place until there's a Federal Reserve repricing or progress in trade relations with the U.S., according to Commerzbank in a note Monday. "Lower USD-CAD levels are unlikely to materialize until then," wrote Commerzbank Foreign Exchange Analyst Michael Pfister in the note.
The US dollar to Canadian dollar's move back above 1.41 appears to reflect broader market drivers rather than recent domestic developments, with oil price expectations and overall US dollar strength playing a larger role, added the bank.
A renewed escalation in the Iran conflict could push oil prices higher and provide near-term support for the Canadian dollar, as Canada is a major oil exporter, said Commerzbank.
However, a strong loonie gain against the greenback requires repricing of Fed interest rate hikes or, "ideally," an extension of the U.S.-Mexico-Canada Agreement on trade.