Rabobank forecasts USD/CAD to commerce in 1.34–1.36 vary as US-Canada fee hole narrows

Rabobank sees restricted BoC easing forward, narrowing US-Canada fee hole to weigh on USD/CAD

Rabobank expects the Financial institution of Canada (BoC) to ship one remaining 25 foundation level fee minimize, probably on the October assembly. Nonetheless, Rabo sees the danger tilted towards no additional easing. The Financial institution of Canada held its coverage fee at 2.75% in July.

Wanting additional forward, Rabobank anticipates the US-Canada rate of interest differential — presently at 175 foundation factors — will slender to round 75 foundation factors by the tip of 2026, because the Federal Reserve accelerates its personal rate-cutting cycle. The BoC is anticipated to have already reached its terminal fee of two.50% by that stage.

The financial institution believes USD/CAD will more and more be pushed by this narrowing fee unfold, forecasting the pair to commerce primarily between 1.34 and 1.36 — a zone of heavy value congestion throughout 2023 and 2024.

This text was written by Aaron Cutchburt at investinglive.com.