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19 Dec 2013
Flash: Short CAD a 'fresh' trade - BMO Capital Markets
FXstreet.com (Moscow) - Stephen Gallo, European Head of Currency Strategy at BMO Capital Partners comments that USD/CAD feels buoyant today so far, even above 1.0700.
Key Quotes
"The CAD’s sensitivity to moves in US rates at the belly of the curve has increased in 2013. But the downside bias in the CAD through the 2 months to Dec-taper is probably more a function of the shift in the stance at the BoC."
"We’ve had three factors during the last week which have been bullish for USD/CAD. Poloz, Dec-taper, and some pretty solid US data. All three of these factors have overshadowed the residual demand to cut CAD shorts into year-end."
"More importantly, these three factors have made the CAD the worst performing G-10 currency versus the USD since December 13th (last Friday). So, the bias matters."
"AUD was not far behind the CAD. In that market, the RBA has been even more aggressive with rhetoric. However, the dovish BoC bias is newer than the RBA’s. That makes short CAD is a ‘fresher’ trade."
Key Quotes
"The CAD’s sensitivity to moves in US rates at the belly of the curve has increased in 2013. But the downside bias in the CAD through the 2 months to Dec-taper is probably more a function of the shift in the stance at the BoC."
"We’ve had three factors during the last week which have been bullish for USD/CAD. Poloz, Dec-taper, and some pretty solid US data. All three of these factors have overshadowed the residual demand to cut CAD shorts into year-end."
"More importantly, these three factors have made the CAD the worst performing G-10 currency versus the USD since December 13th (last Friday). So, the bias matters."
"AUD was not far behind the CAD. In that market, the RBA has been even more aggressive with rhetoric. However, the dovish BoC bias is newer than the RBA’s. That makes short CAD is a ‘fresher’ trade."