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The recent NAFTA related headlines re: the...>

AUSSIE
AUSSIE: The recent NAFTA related headlines re: the US dropping the "contentious"
auto-content proposal in the NAFTA talks adds further credence to Westpac's call
made earlier today "AUD outlook vs CAD - medium term downside potential"
- AUDCAD rallied as far as 1.0240 in March, ten month highs. CAD weakness rather
than AUD gains account for most of AUDCAD's rise this year
- CAD has underperformed amid heightened global trade/NAFTA tensions and as the
BoC has stressed gradualism with future hikes dependent on incoming data. Near
term, the BoC should continue to bide its time, though an underlying firm growth
picture should prompt the BoC to hike rates by mid-2018 and again later in H218.
- The RBA should remain on hold and with China's growth expected to slow through
2018, AUD should grind lower.
- AUDCAD should consolidate around 1.01-1.02 in Q2 but then head clearly lower
in H2 18.
- AUDCAD last 1.0025
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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