Analysts at Wells Fargo forecast the USD/CAD at 1.2000 by the end of 2022. They hold a medium-term perspective positive for the loonie. They point out the GDP report recently released was not as soft as the headline suggested.
“While the news on the Canadian economy for Q2 was negative, we do not believe it was so negative as to alter the likely path of Canadian monetary policy.”
“We still expect the Bank of Canada to slow its government bond purchases further at its October announcement, and to begin raising interest rates in Q3-2022. A temporary period of Canadian dollar softness is possible given the recent subdued economy, political and COVID-related uncertainty, and as the U.S. Federal Reserve contemplates its own move towards tapering its bond purchases potentially by December this year.”
“The medium-term prognosis for the Canadian dollar remains favorable in our opinion—thus we would view declines in the Canadian dollar as more of a buying opportunity. “
“We do not view today’s news as so negative to alter the likely path of Canadian monetary policy. We still expect the Bank of Canada to end its government bond purchases by early next year, and to begin raising interest rates from Q3-2022. We would view any declines in the Canadian dollar as more of a buying opportunity, and forecast the USD/CAD exchange rate at CAD1.2000 by the end of 2022.”
Credit: www.fxstreet.com – Source link