USD/CAD
SHORT TERM OUTLOOKS (AUG’2020 – OCT’2020)
Canadian Economy broadly reliable on Oil, mining and service sector.
COVID-19 pandemic and a severe oil shock has driven the Canadian economy into a recession.
The total federal and provincial fiscal stimulus is estimated to be about 13% of GDP.
CADUSD inverse correlated with crude oil price. Last several weeks oil price trading is narrow range seems upside is limited on the future prospect of demand.
We expect, there will some contraction in Canadian Dollar against greenback. For Short term, USDCAD will show some resistance near 1.360 – 1.3750 levels, but support capped near 1.3150 -1.3300 levels.
LONG TERM OUTLOOKS (JAN’2021 – JULY’2021) ) :- There must be two scenarios.
COVID vaccine available until JANUARY 2021
Economic activity will resume, give some confidence to investors.
Oil Price will get support from a global activity resume.
Service Sector will show moderate recovery, but weakness persists that hurt employment.
In 2ND Quarter of 2021 GDP will show some meaning full recovery.
Government and Central Bank will be accommodating.
After Covid19 vaccine available sentiment will change dramatically, Canadian Dollar (CAD) getting firm against greenback. Long term support will be near 1.2800 – 1.3000 levels as well as Resistance at 1.37 – 1.38 levels.
COVID vaccine available on JUN 2021
Oil Price plunge on lack of demand.
Economic activity subdued that create deep unemployment scenario.
Export Import imbalance will extend trade deficit.
Inflation will gradually increase that give some hope in the manufacturing sector.
Central Bank will come with more stimulus package.
If Vaccine will not available until mid-JUN’21, CAD will show weakness against the USD till 1.38 – 1.40 levels, but the downside will be capped between 1.31 – 1.32 levels.
Note: - USA election, Trade War will play abrupt volatility.
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