What you need to know:
In last month’s edition of the George Davis Report, we discussed some factors that developed during the summer which potentially served as headwinds to reaching our year end forecast for USD/CAD.
As we return from the summer holidays, sharpen our pencils and take stock of the economic backdrop, we have made a few changes to our forecasts.
This includes the introduction of a series of Fed hikes to our US rate profile, while we hold our Bank of Canada call unchanged.
With our correlation profile showing interest rate differentials becoming a more important driver of USD/CAD, the changes in our interest rate forecasts favour USD/CAD gains into year end, followed by a moderate decline as 2027 progresses.
As multiple risks cloud our forecasts, we think that it is more prudent to focus on our forecast profile for USD/CAD (stronger into year end, weaker in 2027), as opposed to the quarterly point forecasts themselves.
For the trading range:
USD/CAD
Buyers
1.3700/1.3800
Sellers
1.4100/1.4200
Don’t miss out - Watch the video now.
