The George Davis Report: July 2019 Edition

Published July 16, 2019 | 3 min watch

A monthly video series on the trajectory of the Canadian dollar

In this edition of the George Davis report, George discusses how a shift in policy expectations has caused the two-year Canada/US interest rate differential to widen and resulted in a change to our currency forecasts.

What you need to know

1

Last month’s identified shift in market sentiment has led to further appreciation in the Canadian dollar.

2

Stronger domestic economic data has corroborated the Bank of Canada’s call for a rebound in growth as we head in to Q2 2019.

3

Add in a dovish pivot by the US Federal Reserve and the resulting widening in the 2-year CA-US interest rate differential has helped to underpin CAD gains.

4

With the BoC signaling a neutral policy stance and the Fed telegraphing a rate cut at their July meeting, we believe that downside risks will persist for USD/CAD.

5

We have lowered our Q3 forecast to 1.28 and Q4 to 1.29 in response.

Hedging Strategies

USD/CAD

Buyers

1.2800 – 1.2900

Sellers

1.3300 – 1.3400

This video is part of our monthly George Davis Report series, with ad hoc reports brought to you as current.

George Davis
Chief Technical Strategist, FX Trading, Strategy & Sales, RBC Capital Markets

With over 25 years of market experience, George Davis is responsible for RBC’s Canadian dollar forecasts as well as intermarket technical analysis research that covers the FX, fixed income and commodity asset classes. Prior to this, he was a Vice President on RBC’s spot Canadian dollar and forward foreign exchange desks in Toronto and a foreign exchange Dealer in Montreal.

His technical research has been recognized via seventeen international awards in the FX, fixed income, commodity and emerging markets asset classes. George was also awarded Technical Analyst of the Year five times (in 2010, 2013, 2017, 2018 and 2019) by the Technical Analyst magazine and in 2016 by the Canadian Society of Technical Analysts, in addition to being inducted into the CSTA Hall of Fame in 2017.

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