BofA Sees USD/CAD Rising to 1.44 Before Falling to 1.38
Analysts at Bank of America expect the USD/CAD exchange rate to rise towards 1.44 in September due to further Federal Reserve tightening. This would be a near-term increase before the pair retreats, according to their forecast.
In July, the US Dollar to Canadian Dollar exchange rate slipped lower, but BofA still sees room for growth. The bank's view is more hawkish than the market's interpretation of Chair Kevin Warsh's latest press conference.
The Fed may need to tighten to restore credibility after long-dated Treasury yields and inflation expectations rose following the July meeting. This would increase the likelihood of a hike in September, according to BofA.
USD/CAD has alternated between sharp monthly gains and losses over the past few months. The Canadian Dollar has performed well against most major currencies, but BofA's forecast is that the pair will fall to 1.38 by December 2027.