Forex Flash: USD/CAD - Loonie expected to strengthen further - Scotiabank
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USD/CAD
FXstreet.com (Córdoba) - The Canadian dollar has gained 0.3% on the day, but up 2.5% since its July 25th low, with today's release of Ivey PMI and building permits, both above consensus, helping the loonie and pushing USDCAD below parity.
"The strength in CAD has moved ahead of interest rate spreads and oil prices but has been supported by the fall in volatility and increasing demand from the options market to protect against USD downside, and a positive shift in sentiment, as well as some minor improvement in US data (most notably nonfarms)", says Camilla Sutton, analyst at Scotiabank.
"We expect China to undergo a soft landing, the US to enter another round of QE, the BoC to maintain its hawkish bias and for Canadian domestic data to hold up reasonably well; together this should help to support a strong CAD", she adds.
"The strength in CAD has moved ahead of interest rate spreads and oil prices but has been supported by the fall in volatility and increasing demand from the options market to protect against USD downside, and a positive shift in sentiment, as well as some minor improvement in US data (most notably nonfarms)", says Camilla Sutton, analyst at Scotiabank.
"We expect China to undergo a soft landing, the US to enter another round of QE, the BoC to maintain its hawkish bias and for Canadian domestic data to hold up reasonably well; together this should help to support a strong CAD", she adds.
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