USD/CAD: Likely to move higher, especially on a 6M-12M horizon – Danske Bank

According to analysts from Danske Bank, the USD/CAD will likely move higher over the next months. The forecast the pair at 1.25 in three months and at 1.27 in six months. 

Key Quotes: 

“To us USD/CAD is best treated as a low beta version of USD/NOK. This is due to the common oil connection and the close connection between the US and Canadian economy which creates a close connection between CAD and USD. On the back of our call for a lower EUR/USD in the medium- to long term, we expect USD/CAD to move higher especially on a 6M-12M horizon. Also, we pencil in a sharper rise in USD/NOK than CAD/NOK as CAD will remain more supported in an environment of broad USD strength than what is the case for NOK.”

“We forecast USD/CAD at 1.24 in 1M (from 1.26), 1.25 in 3M (unchanged), 1.27 in 6M (unchanged) and 1.30 in 12M (unchanged).”