USD/CAD may range trade between 1.3120-1.3457 in short-term - CitiBank

Analysts at Citibank forecast mild CAD appreciation against the US dollar over the medium term. They see USD/CAD at 1.32 in 0-3M, at 1.31 6-12M and at 1.20 over the long term. 

Key Quotes: 

“We expect Canada’s activity to rebound later this year, supporting their view for another hike by the BoC in H2 2019. In addition, BoC may not always follow the Fed. We forecast mild CAD appreciation against this medium term projection.”

“USD/CAD tested 1.3450 level two times in March but failed to sustain, reflecting a major resistance in this level. The pair may range trade between 1.3120-1.3457 in short term.”

“On Friday US will release job data and we expect non-farm payroll may grew by 170k in Mar, far above Feb’s 20k, which may support the USD.”

“Canada’s inflation rose 1.5% yoy, lower than the central bank’s target level of 2%. The BoC may not hike rates in the short term, which may restrain CAD.”

“We revised up the Q2, Q3, Q4 Brent oil forecasts to $69, $74, $72, $65 respectively, which may benefit CAD. Among commodity currencies, the RBA and RBNZ are more dovish while the BoC is more hawkish, which may underpin CAD.”