Goldman Sachs on FX markets looking for 'the next Canada' (& USD/CAD forecast)
Comments on Canada from Goldman Sachs (these appeared in a slightly different form on site earlier - bonus points if you can find it ;-) )
From GS morning note (US, Thursday)
The "next Canada" might be Canada.
- As investors scour FX markets for the "next Canada", the answer might just be Canada.
- The BoC surprised many investors this year by hiking and signalling more hikes to come. Real GDP increased by 3.7% in Q1 and is on pace for a similar gain in Q2. While inflation in Canada is still below target, with the unemployment rate falling to just 6.3% in July and house prices still very elevated, we doubt the BoC will be inclined to pause any time soon.
- We have therefore lowered our USD/CAD forecast to 1.20 from 1.28 previously.