USD/CAD to continue its downtrend toward 1.30 by year-end – BofA

Economists at the Bank of America expect the USD/CAD pair to embark on a downward trajectory over the course of the year.

Fed’s rate cuts to overshadow the BoC’s policy adjustments

We expect the Federal Reserve to implement 100 bps of rate cuts starting in March 2024. For the Bank of Canada, we foresee 125 bps of cuts beginning in June.

As long as the Fed cuts rates as anticipated in 2024, USD/CAD could continue its downtrend, regardless of slightly more aggressive cuts by the BoC.

We predict a continued downtrend for USD/CAD, targeting a level of 1.30 by the end of 2024.