BofA Sees USD/CAD Rising to 1.44 in September

Analysts at Bank of America predict that the US Dollar to Canadian Dollar exchange rate will rise towards 1.44 in September due to further Federal Reserve rate hikes supporting the dollar.

The forecast is based on a renewed period of tightening, with BofA expecting 25bp hikes at each of the remaining three Fed meetings this year: September, October, and December.

BofA's view is more hawkish than the market's interpretation of Chair Kevin Warsh's latest press conference, which was seen as dovish by some.

The bank argues that the Fed may need to tighten partly to restore credibility after long-dated Treasury yields and inflation expectations rose following the July meeting.