AUDCAD: Hard to see making another run at this month’s highs around 1.01 - Westpac

Sean Callow, Research Team at Westpac, suggests that it is hard to see AUD/CAD making another run at this month’s highs around 1.01 any time soon.

Key Quotes

“Oil prices should continue to find support ahead of the informal OPEC meeting late Sep, capping USD/CAD rallies.

The CAD outlook was already looking more promising, with GDP likely to rebound in Q3 after the Fort McMurray fires, fiscal stimulus on the way and the Bank of Canada leaning to the optimistic side on the economy. This is keeping market expectations for further BoC easing quite low.

However, we expect AUD/USD to also trade fairly well in the next few weeks. Australia’s key commodity prices seem set to hold around 18 month highs near term, while the RBA should be firmly on hold in Sep and Oct.

Both AUD and CAD should benefit from a lack of urgency at the Fed to raise rates before December. The steady hand we expect at the 21 Sep FOMC meeting should see USD/CAD edge down to 1.27 and AUD/USD around 0.77. This points to AUD/CAD weakening only modestly, to the midhigh 0.97s. Our year-end forecast is 0.98, with softer commodity prices and a Fed hike to weigh on both AUD and CAD versus USD.”