Targets For CAD Into 2016 by SocGen: trade sideways until mid-2016 to rise to 1.35

Targets For CAD Into 2016 by SocGen: trade sideways until mid-2016 to rise to 1.35

2 November 2015, 06:11
Sergey Golubev
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Societe Generale made a technical and fundamental forecast for USD/CAD for 2016:

  • "The Canadian dollar has been heavily affected by movements in crude oil prices in recent years. There has been an average correlation of -0.55 on USD/CAD spot versus WTI front-month prices year-to-date, using daily two-month rolling correlation."
  • "Our commodity strategists expect crude oil prices to stabilise at current levels and trade sideways until mid-2016, so CAD will not be getting a lift from oil in the next few months."
  • "The Bank of Canada will also lag the Fed in raising rates. The Liberal victory in the Canadian federal elections should result in a small fiscal boost to growth. The Liberals promised increased infrastructure spending and a more redistributive tax system, and that should boost growth marginally over the next two years."
  • "This implies that USD/CAD should rise further in coming months, to 1.35 by mid-2016 in our view. CAD however should outperform the likes of AUD and NZD on the back of the Fed lift-off in H1 2016."

From the technical point of view - the USD/CAD pair is traded on bullish market condition with the secondary ranging within 1.3456 resistance and 1.2830 support level so if the forecast of ocGen is correct one - we may see this 1.3456 resistance level to be broken by mid-2016.



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