J.P.Morgan Recommend Long AUD/CAD

J.P.Morgan write “selling CAD on crosses during periods of exceptional USD weakness has proven highly effective over the last twelve months.”

• “We see scope for this trend to continue vs other G10 high-beta FX, and to that extent, long AUD/CAD is viable in this scenario.”
• “Our economists expect the BoC to ease in 2Q24 (among the earliest in G10) while the RBA is forecast to stay on hold throughout the year, which implies scope for rate convergence.”
• “More broadly, AUD/CAD can serve as a proxy for AUD/USD, and stands to strengthen if global growth continues to find its footing into the new year.”
• “With entry levels also not screening as particularly prohibitive, coupled with the aforementioned supports, we initiate a new AUD/CAD long position in cash.”
• The long recommendation came with AUD/CAD trading at C$0.8971, with a stop loss of ~2.5%.