CIBC entered a long USD/CAD...........>

DOLLAR-CANADA: CIBC entered a long USD/CAD position at C$1.3475 post-BoC, with a

target of C$1.4100 and a stop at C$1.3220.

- CIBC summarised the BoC decision as follows "Removal of hiking bias? Check.

Lower neutral rate estimate? Check. 2019 GDP revised lower? Check. Estimate for

the output gap is wider? Check." They went on to note that the Bank's forecasts

"aren't exactly consistent. Our subjective odds of a rate cut for this year are

closer to 25%. Fundamentally, we've liked being short CAD for a while, and now

technically the stars are aligning for long USD/CAD as the setup is too strong

to ignore. An alternative strategy that we endorse is owning 1-year USD/CAD ATM

vols. For those that want to play for a steeper curve, we continue to like

USD/CAD FVA's to buy 10-month vol, two months from now. On the crosses, we're

still short CAD/SEK." Risks to the view include "higher oil prices, though the

correlation shows signs of waning in the near-term. The futures market is

already short CAD to a degree though there is still some scope there and

sentiment remains biased towards CAD gains according to normalized risk

reversals. Volatility clustering continues to be a risk."