J.P.Morgan Like Long CAD Vs. USD & EUR Basket

Friday saw J.P.Morgan note that they've "taken a more constructive view on CAD which has been predicated on an improved growth outlook as well as oil. Our commodity colleagues now project global oil benchmarks around $12 higher from current levels; historically in CAD that is worth between 3-5% and is consistent with USD/CAD in the low C$1.20s with high explanatory power (USD/CAD is approximately fairly valued to current oil levels). The revocation of the Keystone XL pipeline permit by the Biden administration was expected and does not threaten Canada's near-term oil prospects; nevertheless, we will be monitoring whether Biden takes his pro-climate policy any further in a way that affects pipeline distribution. We have also recently upgraded our Canada growth forecasts… Should the BoC's newly-updated growth forecasts materialize later this year, that puts them on a course towards officially tapering their pace of bond purchases… The risk here is that restrictions and lockdowns extend beyond the Bank's assumed February cut-off, but if not, Q1 may set a more constructive foundation for determining whether growth actually matches BoC forecasts (they have a bearish -2.5% saar penciled in). We will also be watching for signs of increased concern surrounding the level of the exchange rate, though our interpretation from the meeting is that CAD strength is viewed as appropriate given the current macro backdrop. Buy CAD vs 50:50 basket of USD, EUR in cash. Stop loss at 3%. Spot ref: C$1.2695 and C$1.5447."