Citi: Trade of the Week: Long USDCAD – FXWW Chatroom

Our weekly trades will provide short term guidance on where we see 1-2 week opportunities in G10 FX markets. Unless we explicitly extend them, they will close out automatically at COB the second Friday after they are introduced. 
Trade idea: Buy USDCAD 1.2787 target 1.3065, stop 1.2633 
  Our view: 
·         Downward pressure on oil prices is likely to continue and CAD is likely to drop alongside 
·         Canadian economic data are surprising on the downside and look likely to weaken further (Figure 1) 
·         CAD positioning is moderately short on the CitiFX Access platform (-1.25) and modestly short in CitiFX PAIN (-27). 
·         A Canadian policy rate cut is not fully priced in at any point over the next year and the drop in oil could leave room for another ‘precautionary’ policy rate cut earlier rather than later 
·         Note that we may close the position before FOMC if we think a dovish outcome will emerge 

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