The head of foreign-exchange strategy at Credit Suisse thinks Bank of Canada policy makers will be quick to try to curtail a significant rise
That’s the message from the global head of foreign-exchange strategy at Credit Suisse who expects the tailwinds seen in 2019 to fade. While risk-sensitive currencies like the loonie should perform well if the global economy continues to firm, Shahab Jalinoos believes Bank of Canada policy makers will be quick to try to curtail a significant rise.
The Canadian dollar is on pace to be the best-performing major currency in 2019, notching an almost 5 per cent gain against the greenback in a year that saw foreign-exchange volatility sink to record lows. Resurgent commodity prices helped buoy the currency, as did a central bank that kept borrowing costs steady, making it an outlier in the global easing trend.
One technical indicator pains a brighter picture for loonie bulls. The pair trade is on track for a monthly close well below its long-run trend support at US$1.3155, which would provide a clear signal that there’s more U.S. dollar weakness in the offing. While charting patterns suggest firm support for the greenback in the low-to-mid $1.30 range — a level breached on Tuesday — there may be little in the way of longer run supports until the $1.28 zone.
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