GS Push USDCAD Forecasts Higher

Goldman Sachs late last week revised their USDCAD forecasts from 1.34, 1.32 and 1.30 in three-, six- and 12-months to 1.40, 1.38 and 1.36.

• Last Tuesday’s events appear a big driver: “Core inflation is now below 2% on a 3-month annualized basis. Barring any surprises in the April inflation data, a June cut looks very likely.”
• “Governor Macklem’s conversation with Fed Chair Powell this week put into sharp relief the difference between the economic backdrops in Canada and the US.”
• “BoC and Fed policy can diverge, and we think it is likely they will, given that the backdrop calls for diverging policy paths.”
• “This also takes into account our view that USD depreciation has been delayed”, noting separately that “long Dollar calls still represent good hedges against geopolitical and inflation risks.”