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USD/CAD: Canadian dollar likely to weaken further despite rebound this week – Rabobank

The USD/CAD pair ended the week up more than 200 pips. Still, the Canadian dollar rose sharply against the New Zealand and Australian dollars. Analysts at MUFG still believe that USD/CAD will see further upside on the back of a stronger dollar. Their target is 1.3420 with a stop loss of 1.2600.

Key quote:

“Part of the reason why the Canadian dollar depreciated less than the rest of the G10 this week is a stronger indicator of underlying inflation Helped to drive some pricing in the Bank of Canada rate hike.”

“With more pressure on slowing global growth, the near-term outlook for crude oil remains poor on oil prices. Also, there are numerous reports This shows that Russia has the ability to continue to be a major crude oil supplier, which makes the global supply and demand balance less supportive for crude oil prices.”

“We also added that given the high leverage of Canadian housing, adding The impact of interest rates on Canada is becoming increasingly evident, with the strong correlation between the Canadian dollar and global stock market performance. While we do not expect a sharp reversal in equity markets in the near term, generally fading optimism about lower inflation suggests that downside risks to equity markets are increasing. ”

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