CAD hits lowest since January as politics.....>

FOREX: CAD hits lowest since January as politics conspires against currency

-Having closed above the 50-dma yesterday, USD/CAD added to recent gains and

eyes the C$1.3350 level to trigger any further upside as the domestic political

outlook worsens. Ministerial resignations from Trudeau's cabinet are placing

further pressure on the PM following the breaking of the SNC-Lavalin corruption

scandal. The moves come ahead of the Bank of Canada rate decision due tomorrow,

where the Bank are expected to keep policy unchanged at 1.75%.

-Elsewhere, risk appetite is returning modestly, with most major European and

Asian equity markets in minor positive territory, helping underpin USD/JPY's

recovery back towards Y112 (at which, $1.9bln in option expiries is due to roll

off today).

-AUD trade was largely uneventful as the RBA rate decision was unchanged

(alongside expectations) although the proximity to GDP data and a speech from

the RBA governor may mean the calm is short-lived.

-Attention turns to US ISM non-manufacturing PMI and new home sales for

December. Fed's Rosengren, Kashkari & Barkin and BoE's Carney are due to speak.