USD/CAD set to surge higher above the 1.30 level – ING

Last week, the loonie was hardly hit from the global risk-off mood, losing around 3.0% against the dollar and getting close to the 1.30 level. In the next few days, economists at ING expect the USD/CAD to break above the 1.30 mark.

Risks of a move above 1.30

“Another leg higher in USD around the Jackson Hole conference, more drops in global risk appetite and further signs of weakness in the oil market might push USD/CAD above 1.3000 in the week ahead.”

“Any signs of better resilience of CAD compared to other pro-cyclicals will likely be determined by the ability of oil prices to survive the current re-rating of global growth. At the same time, we note that USD/CAD is currently 2.8% overvalued, which may suggest most of the negatives may have been priced into the pair already.”