Don’t miss this month’s edition of the George Davis Report, where George discusses RBC’s forecast revisions for the Canadian dollar and rolls out our 2025 forecasts as well.
What you need to know:
Our new FX forecast deck sees USD/CAD peaking in Q2 2024, followed by a decline in the second half of the year that is expected to continue at a slower pace in 2025.
While the shape of our forecast profile remains the same, the peak for USD/CAD has been lowered due to the Fed pivot which took place in December of last year.
The economic cycle is expected to be an important factor for CAD, with broad-based USD direction remaining in place as the primary cross asset driver of the currency pair.
Our new forecasts remain above consensus through the middle of this year before converging with consensus estimates into year end.
The evolution of growth and inflation data will serve as key risks to our view, as continued strength in the data may call the pace and sequencing of cuts into question as we move forward.
For the trading range:
USD/CAD
Buyers
1.3300/1.3400
Sellers
1.3700/1.3800