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OPTIONS: SocGen Trade BoC Cut Prospects Via USD/CAD Options

OPTIONS
BulletForeign Exchange Bullets

 SocGen issue new trade recommendation: buy USD/CAD calls as BoC get closer to rate cut

  • SocGen write that lower levels of core CPI put the BoC in the dovish camp, suggesting wider policy divergence with the Fed. As such, the prospect of lower CAD rates could pave the way for USD/CAD to move towards 1.40.
  • They eye the 3m tenor, capturing both meetings on 5 June and 24 July, including the market reaction to the latter, which looks the more likely of the two for a rate cut.
  • To trade a June cut: Buy USD/CAD 1m one-touch 1.3980
  • To trade a July cut: Buy USD/CAD 3m call spread 1.3850/1.40
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 SocGen issue new trade recommendation: buy USD/CAD calls as BoC get closer to rate cut

  • SocGen write that lower levels of core CPI put the BoC in the dovish camp, suggesting wider policy divergence with the Fed. As such, the prospect of lower CAD rates could pave the way for USD/CAD to move towards 1.40.
  • They eye the 3m tenor, capturing both meetings on 5 June and 24 July, including the market reaction to the latter, which looks the more likely of the two for a rate cut.
  • To trade a June cut: Buy USD/CAD 1m one-touch 1.3980
  • To trade a July cut: Buy USD/CAD 3m call spread 1.3850/1.40