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Our official USD/CAD forecast for the Q2 is around 1.02 and that is predicated from the view that the US economy will continue to grow; however, not significantly relative to market expectations. Because the Canadian economy is showing strong performance as well, the USD is unlikely to appreciate considerably from here. When we put the context of concerns surrounding European sovereign debt crisis and potential concerns around slowing Chinese economy, that will hold the CAD relative to the US Dollar at around current level.
At the end of this year we forecast the Canadian Dollar improving to 0.97. The trading range for USD/CAD is relatively narrow. I think that reflects the fact that the market expectations for the Bank of Canada remain broadly unchanged. Rate hikes coming in 2013 have absolutely no impact on 2012, thus they are not priced in. We aren't anticipating the changing trend from the Bank of Canada and we expect the US economy to continue to grow.
If we look at the exceptionally long-term, it does suggest that USD/CAD should be higher; however, if we look at the short-term, say on a weekly basis, the USD/CAD should be slightly higher but not by much. It is got around the parity in the short-term or mid-term forecast in terms of fair value valuation for USD/CAD.