Morgan Stanley went long USD/CAD at...>

DOLLAR-CANADA: Morgan Stanley went long USD/CAD at the NY close, with a target

of C$1.3650 and a stop at C$1.3050.

- Morgan Stanley view "the USD/CAD upward correction as likely to continue. CAD

has the strongest correlation to financial market indicators linked to growth

and risk sentiment - equities and long rates. The combination of a more hawkish

than expected Fed coupled with a continued softening in the growth outlook

suggests that risk appetite is likely to come under pressure, keeping USD/CAD

supported. Oil also looks soft as demand continues to fall and inventories build

further. We acknowledge that Canadian economic data have remained reasonably

firm,a relatively isolated bright spot amid the slowing global backdrop, though

this has failed to keep CAD supported, which we view as an important signal.

USD/CAD has broken the 1.32resistance level, suggesting further upside momentum.

The key risk to the trade is that BoC rhetoric turns more hawkish, suggesting

that they are considering raising rates again, which would be CAD positive."