In a week filled with large risk events, we believe that USDCAD could see some support. Should the Fed deliver a less dovish tone, then this would pressure high-beta currencies, including CAD. US economic strength is having less of an impact on Canada than it did in the past, so we see this having only limited support for CAD. The BoC remains dovish despite inflation remaining strong, so with markets expecting an unchanged reading for CPI (Fri), CAD could continue to remain under selling pressure in a falling risk environment.
We recommend buying USDCAD at 1.1040, with a stop at 1.0980 and target of 1.1250.
Note: USD/CAD is currently trading at 1.1086.
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