The USD/CAD pair will likely move to the upside over the next months according to analysts at Danske Bank. They forecast the pair at 1.36 in a twelve-month horizon. 

Key Quotes: 

“CAD has over the last month risen on the global setback to risk and Bank of Canada (BoC) disappointing market expectations. At the January meeting markets priced a higher than 50% likelihood of a rate hike yet BoC kept its guidance that the first hike will come in the “middle quarters” of 2022. While we cannot rule out a hike at the interim March meeting we still think the big meeting in April is the most likely time for the first hike.”

“We still regard relative rates to be a positive for USD/CAD and we pencil in more topside to the cross from our view on the external environment.”

“We still like to treat USD/CAD as a low beta version of USD/NOK, We now forecast USD/CAD at 1.29 in 1M (from 1.25), 1.31 in 3M (from 1.29), 1.33 in 6M (1.32) and 1.36 in 12M (1.33).”