The USD/CA has fallen significantly in recent weeks. However, this was due to a pronounced weakness of the USD instead of a strength of the CAD. If the US dollar recovers, we are likely to see higher levels again. In addition, the real Canadian economy continues to fight and the threat of American tariffs has not yet been avoided. The risks of the body will probably only decrease in the second half of the year, says Michael Pfister, CommerzBank’s currency analyst.
The USD/CAD falls despite the fears of commercial war
“Only a few weeks ago we were talking about the threat of a large-scale commercial war in North America and American tariff almost entirely driven by the USD’s pronounced weakness. “
“Despite these developments, we see a greater probability of a return to higher levels of the USD/CAD. Our economists expect the Fed to be quite cautious with its feat cuts, despite the concerns about the real economy. If our US economists are right, both our evaluation of the real economy of the USA and the Fed should lead to a recovery of the US dollar in the coming weeks.”
“Given the risks of American commercial policy and the weakening of the real economy, there is a risk that the Bank of Canada (BOC) has to reduce its policy rate in expansive territory. In the best case, the BOC should not have problems to keep the rates at this level for a prolonged period. On the scenario much worse, it is likely that several fees cuts occur this year this year.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
