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CIBC Flag Two Trade Ideas to Express Long CAD View

CAD
  • Short USD/CAD via 3m, 1.30 strike (USD put, CAD call) to pay a premium of USD 0.29%. Their positioning proxies see funds and AMs now heavily short the CAD. CIBC don’t agree with market pricing for rate cuts this year and as such rate cuts priced for this year should migrate out to 2024 – which would be consistent with a stronger CAD.
  • Short GBP/CAD to target 1.6100, with a S/L at 1.6915 for a P/L target of +3.82%. They see the cross rolling over just below key resistance at 1.6840/50. They see the SONIA curve implying decent odds for additional rate hikes, however, they see the BoE as likely closer to a pause than many think.

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