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Belly Led Rally As USDCAD Back At 2021 Levels

CANADA
  • FI: GoCs see a growing, belly-led rally as they by and large track Tsys at the front-end to belly but continue to outperform further along the curve.
  • FX: USDCAD trades +0.95% at 1.2996 having earlier cleared a bull trigger at 1.2964 (Dec 20, 2021 high). There appears to be initial resistance at the round 1.30 (earlier high of just that) after which it opens highs from 2020 at 1.3029 (Nov 25, 2020 high).
  • Despite this, CIBC strats continue to see risks somewhat to the upside for the pair (1.3300/50), driven by a view that market pricing for BoC terminal rates is too high relative to the US considering differences in private sector leverage.

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