Risk Management

USD/CAD: Risk appetite to be challenging for a while longer, weighing on the loonie – HSBC

Central financial institution pivots create fascinating dynamics for FX, explaining the current decline in USD/CAD. But danger urge for food stays the dominant driver of the Canadian dollar, economists at HSBC report.

Central financial institution pivots create fascinating dynamics
“For FX, central financial institution pivots are at the top of monetary market trend and increase fascinating questions. On the one hand, person shifts closer to a much less hawkish stance proceed to be related with nearby foreign money weakness. But on the different hand, the collective shift closer to slower tightening seems to be boosting hazard appetite, which conversely favours many of the currencies the place central banks have pivoted.”

“In the end, threat urge for food stays the dominant driver of the CAD. With the US Federal Reserve and the BoC nonetheless in the temper to tighten, the outlook for financial increase and danger urge for food is set to be difficult for a whilst longer, in all likelihood weighing on the CAD.”

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