As many G-10 economies increasingly bear the brunt of soaring yields, the US, less sensitive to a reset in mortgage rates than the likes of Canada and Australia, “is better equipped to deal with higher rates than the market expects,” CIBC strategists led by global head Bipan Rai wrote in a Friday note.
CIBC now expects the euro to fall 2% lower to $1.05 by the end of the year, joining a chorus of Wall Street analysts who have revised their calls on the common currency lower in recent weeks. The Canadian bank sees the loonie falling to 1.39 per dollar through the end of the fourth quarter, also 2% off current levels and a mark last seen in October.
CIBC also expects investors to buy dips in the dollar given a worsening environment for risk assets, chiefly driven by an uncertain growth picture in China. According to Rai, China’s primary trading partners like Germany and Australia could be particularly compromised.