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- USD/CAD: Still overvalued; CAD positioning neutral - Danske
USD/CAD: Still overvalued; CAD positioning neutral - Danske
eFXdata reports that Danske Research discusses USD/CAD outlook and maintains forecast profile unchanged at 1.32 in 3M, 1.29 in 6M and 1.27 in 12M.
"The CAD is caught between suffering energy (warm weather, virus fears and strong USD) and a global investor preference for US assets, which indirectly has supported the broad CAD. Bank of Canada has turned significantly more dovish in recent months and we keep our baseline call of two 25bp rate cuts over the coming 12M. In comparison, markets price 35bp worth of cuts," Danske notes.
"Fundamentally, we still regard USD/CAD as overvalued, with fair-value estimates in the low 1.20s. According to CFTC IMM data, speculative CAD positioning is neutral but investors have recently added significant amount of shorts," Danske adds.
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