FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, views that while rising rebounding oil prices has supported CAD, rate cut expectations from the BoC will keep the currency pressured against the USD for a move towards 1.26.
Key Quotes
“Oil prices have been benefitting from a modest reprieve; Nymex futures have held above the $50 /b level though most of Feb. This is good news for oil producing nations such as Canada and consequently the news has lent support to the CAD.”
“That said, the market sees a strong chance that the BoC will cut interest rates again in March or April. This suggests there is potential for the CAD to fall further vs. the USD in the coming months.”
“In recent years, record levels of household debt and a fast appreciating property market have been used as arguments against further BoC easing.”
“Calgary’s house prices are currently cooling fast on the back of the slowing oil industry. National data is indicating that overall house price growth is slowing.”
“Although we have shaved our forecasts for USD/CAD on the back of the more stable oil prices, we see risk of a move back towards the 1.26 area in the coming weeks on market speculation of another BoC rate cut.”
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