Rabobank does not believe in the growth of the Canadian dollar
Recovery of oil prices and growth of appetite for risk provided a favorable time for recovery of the Canadian dollar, and currency strategists of Rabobank decided to raise their forecasts. However, the current rally, in their opinion, is excessive. They note that breakthrough below 1.3830 provided an impulse for a new wave of decline, but doubt that the movement will be sustainable.
The bank draws attention to the fact that the improvement in the oil market is not yet so significant as to help Canadian producers, whose production will continue to decline. Risks for the Canadian dollar also pose a risk of decline in market optimism in case of the second wave of coronavirus. If a favorable scenario develops, the Canadian currency also does not look too positive, given the advanced recovery in the USA.
Rabobank lowered its one-month forecast for USD/CAD from 1.44 to 1.38, but expects the exchange rate to recover to 1.42 in the three-month outlook (previous forecast was 1.46).