Canadian Dollar : Modest downside on trade risks and yields – HSBC
HSBC strategists highlight a bearish stance on the Canadian Dollar (CAD), noting that the breakdown in US–Canada trade talks has driven USD/CAD higher but is unlikely to be a persistent drag.
HSBC analysts maintain a cautious outlook on the Canadian Dollar (CAD), attributing the recent surge in USD/CAD to the breakdown in US-Canada trade negotiations. While the trade disputes currently represent only a minor challenge, affecting just 5% of Canada's exports to the US, there is a possibility for escalation if the situation deteriorates further.
Reports suggest the standoff may persist beyond the US mid-term elections in November. Nevertheless, the analysts believe trade risks are likely already priced into the CAD, indicating that further upside may be limited. Instead, they emphasize the broader USD trend and 2-year yield differentials as more significant drivers of the currency's movement.
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