The Canadian dollar has been hit by oil prices but also the USD has troubles of its own.
What’s next? Here is a look at both CAD and GBP:
Here is their view, courtesy of eFXnews:
The following are CIBC’s weekly outlook for the CAD, and GBP.
CAD Resilient…For Now. With international crude benchmarks continuing to trend lower, the C$ has been surprisingly resilient. In addition to the slide in international prices, the discount on Canadian heavy crude has also increased. That means that oil producers have seen a double whammy from price action. Nevertheless, since the beginning of the month, the Canadian dollar’s value versus the greenback has held up pretty nicely. Moving forward, however, the loonie still seems vulnerable, and speculators agree.
With the Fed moving in September and the weakness in crude showing up in economic data later this year, the loonie should trend weaker during the remainder of 2015.
USD: Excuse US a Minute. According to markets the Fed minutes struck a dovish tone. To us, not so much. But it’s true that some members appear to be wanting further reassurance on the inflation front before voting to raise interest rates. Core PCE, at 1.3%, is well below 2% and where it has been when the Fed started its prior two hiking cycles. However, officials have also suggested that, with hindsight, the Fed was too late to start raising interest rates in 2004. Back then, unemployment was as close to its “full employment†rate as it is today.
We still expect that the majority of policymakers will vote for a September move that will see the US$ to be firm again.
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