ING Sees Limited Upside for Canadian Dollar, Forecasts USD/CAD at 1.36 in One Year
The Canadian dollar is unlikely to receive much support from interest rate differentials because Canadian yields don't offer a compelling advantage over U.S. yields, according to ING Global Markets Research in a note Monday. ING said it sees limited scope for markets to meaningfully bring forward expectations for Bank of Canada tightening, with only around 17 basis points of hikes currently priced by year-end. Canada's jobless rate fell for a second straight month in June as employment recovered, while inflation is expected to move back below the 3% upper target bound, added the bank. ING estimates little risk of a core inflation rebound strong enough to justify a rate hike this year, absent a sharp energy price shock. The bank forecasts the USD/CAD exchange rate at 1.41 in one month, at 1.39 in three months, at 1.37 in six months and at 1.36 in one year. At the time of ING's note, the exchange rate was 1.41.
The Canadian dollar is unlikely to receive much support from interest rate differentials because Canadian yields don't offer a compelling advantage over U.S. yields, according to ING Global Markets Research in a note Monday.
ING said it sees limited scope for markets to meaningfully bring forward expectations for Bank of Canada tightening, with only around 17 basis points of hikes currently priced by year-end.
Canada's jobless rate fell for a second straight month in June as employment recovered, while inflation is expected to move back below the 3% upper target bound, added the bank.
ING estimates little risk of a core inflation rebound strong enough to justify a rate hike this year, absent a sharp energy price shock.
The bank forecasts the USD/CAD exchange rate at 1.41 in one month, at 1.39 in three months, at 1.37 in six months and at 1.36 in one year.
At the time of ING's note, the exchange rate was 1.41.