Forex Flash: USD/CAD would remain above parity on QE, fiscal cliff' Scotiabank
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USD/CAD
FXstreet.com (Barcelona) - The cross is posting meagre gains on Thursday, around the 0.9925 region, as the demand for the safe havens remains subdued on better prospects for the US 'fiscal cliff'.
The Canadian current account has widened its deficit during the third quarter, although its effects were eclipsed by the news surrounding the US 'fiscal cliff'.
According to Camilla Sutton, Chief Currency Strategist at Scotiabank, "A renewed focus on Fed policy and the likely expansion of QE3 combined with progress towards an agreement on the fiscal cliff have offset the weight of expectations for a deterioration in the current account balance and a CAD negative article in the FT& The article suggests that at current levels CAD is overvalued, leaving the net long position vulnerable to being unwound as fears over housing, falling exports, rising imports and uncertainty at the BoC continue to rise. However we would note that as long as the US lacks a credible fiscal plan and the Fed is undertaking USD negative programs, such as QE, CAD is likely to remain above parity".
The Canadian current account has widened its deficit during the third quarter, although its effects were eclipsed by the news surrounding the US 'fiscal cliff'.
According to Camilla Sutton, Chief Currency Strategist at Scotiabank, "A renewed focus on Fed policy and the likely expansion of QE3 combined with progress towards an agreement on the fiscal cliff have offset the weight of expectations for a deterioration in the current account balance and a CAD negative article in the FT& The article suggests that at current levels CAD is overvalued, leaving the net long position vulnerable to being unwound as fears over housing, falling exports, rising imports and uncertainty at the BoC continue to rise. However we would note that as long as the US lacks a credible fiscal plan and the Fed is undertaking USD negative programs, such as QE, CAD is likely to remain above parity".
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