Canadian dollar outlook turns less cheerful as recession fears mount

Canadian dollar outlook turns less cheerful as recession fears mount

Canadian dollar

USD/CAD is trading down 0.41% at 1.2980

The Canadian dollar will gain less ground than previously thought over the coming year as the growing risk of a global economic slowdown bolsters demand for safe-haven currencies such as the U.S. dollar, a Reuters poll showed.

The median forecast in the poll was for Canada’s currency to strengthen 1.6% to 1.28 per U.S. dollar, or 78.13 U.S. cents, in three months’ time, compared to 1.26 in last month’s forecast.

It was then expected to climb to 1.25 in a year’s time, compared with the previous forecast of 1.23.

Economists have slashed their forecasts for global economic growth in recent weeks as the war in Ukraine and COVID-19 lockdowns in China exacerbate supply shortfalls, making it more likely that central banks will hike interest rates aggressively to tackle soaring inflation.

Oil, one of Canada’s major exports, has plunged about $25 in recent weeks, dropping back below $100 a barrel, and Canada’s commodity-linked stock market has fallen 15% below its March record high.

The Bank of Canada is set to raise its overnight rate by a hefty 75 basis points (bps) next week and by another 50 in September, front-loading a campaign to take monetary policy to where it will restrain the economy, a separate Reuters poll showed on Wednesday.

As central banks tighten, yield curves have been flattening. A closely watched part of the U.S. Treasury curve, between 2- and 10-year yields, has inverted. That’s a phenomenon that has in the past preceded U.S. recessions.

On technical fronts USD/CAD RSI stood at 58.35 and currently it is trading above all MA. So, BUY position can be taken with following target and stoploss:

TRADE SIGNAL – : USD/CAD – BUY: 1.2978, TARGET: 1.3075, STOP LOSS : 1.2910

About Author

Related posts

U.S. dollar Index

U.S. dollar holds gains ahead of Fed minutes 

Dollar Index is trading up 0.23% at 106.59 The dollar held onto gains against other major currencies on Wednesday, ahead of the release of minutes of the U.S. Federal Reserve’s July meeting that could give further clues about the pace of further interest rate hikes. The greenback has recovered...

Read More
U.S. stock index futures

Futures tick lower as retail earnings kick off

NASDAQ 100is trading down 0.03% at 13673.24 U.S. stock index futures inched lower on Tuesday as investors assessed results from retailers Walmart (NYSE:WMT) and Home Depot , while signs of a slowing global economy continued to keep investors on edge. Walmart Inc rose 3.3% in trading before the bell...

Read More
Bayer AG

Bayer launches sustainable agriculture hub to connect U.S. farmers, food and fuel makers

Bayer AG (ETR:BAYGN) is trading down 0.92% at 53.60 Agricultural seeds and chemicals maker Bayer AG (ETR:BAYGN)on Monday launched a digital farming platform that it says will help U.S. growers enact environmentally friendly practices and connect them with companies seeking more sustainable food, feed and biofuel ingredients. The effort...

Read More

Leave a Reply