Goldman Sachs recommend getting.......>

DOLLAR-CANADA: Goldman Sachs recommend getting short USD/CAD with a target of

C$1.27, with a stop at C$1.35. This is part of their top trades for 2019

release.

- Goldman writes that "the U.S. and Canada are at similar stages of the economic

cycle, meaning the BoC is likely to remain hawkish in the near term and rates

should converge to similar levels. Even though uncertainty lingers around the

passage of USMCA, it should be less of a headwind to CAD than it had been prior

to the deal announcement (due to lower tail risk), and our DC economists expect

the agreement will eventually be approved. Our equity analysts also see scope

for some improvement from current WCS spot levels - another recent headwind to

CAD vs USD - on i) refineries coming back online from maintenance and ii)

favorable seasonal production patterns. However, they expect the WTI-WCS spread

to average $30 in 2019 (wider than consensus) as capacity constraints likely

remain prominent, which could limit CAD outperformance in the medium term."