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Aug 14 - 12:55 AM

CAD: Keep Rising As Risk Rallies But 3 Reasons To Be Cautious Here - Goldman Sachs

By eFXdata  —  Aug 13 - 04:30 PM

Goldman Sachs adopts a cautious bias on CAD in the near-term.

"We expect CAD to continue to strengthen as risk rallies, but we are more cautious on the currency outside of it’s high-beta feature for three reasons: (i) the economy is still slowly recovering from the twin virus-oil shock, (ii) housing market vulnerabilities persist, with monetary policy expected to remain highly accommodative for an extended period of time, and (iii) the renewed rise in US-Canada trade tensions may slow any appreciation pressures," GS notes. 

"If the reopening process in the US remains bumpier than in Canada, there may be scope for relative growth expectations to shift in CAD’s favor. But as long as the probability of a widely distributed vaccine within the next year continues to rise, investors may look through any US underperformance on virus control, since a vaccine would most likely provide the biggest boost to US growth," GS adds. 

Source:
Goldman Sachs Research/Market Commentary

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