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USDCAD At High End of YTD Range, CAD Net Shorts Built Even Further Pre-BoC

CANADA
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  • USDCAD has seen a high of 1.3775, a sizeable further increase on the day despite the day’s increase in equity futures.
  • It has cleared two July highs and leaves it at the high end of a multi-month range, with initial resistance now at 1.3792 (Jun 11 high) before a bull trigger at 1.3846 (Apr 16 high).
  • CAD outperforms high beta peers on the day although on a trade-weighted nominal basis remains at some of the weakest levels in the past few years.
  • Market attention is on Wednesday’s BoC decision with a second cut almost fully priced and latest CFTC data showed that for futures at least, CAD net shorts reached new recent extremes at 47% of open interest.
  • We also expect a cut although think it’s a closer call than market pricing suggests – the MNI Preview will follow later.

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  • USDCAD has seen a high of 1.3775, a sizeable further increase on the day despite the day’s increase in equity futures.
  • It has cleared two July highs and leaves it at the high end of a multi-month range, with initial resistance now at 1.3792 (Jun 11 high) before a bull trigger at 1.3846 (Apr 16 high).
  • CAD outperforms high beta peers on the day although on a trade-weighted nominal basis remains at some of the weakest levels in the past few years.
  • Market attention is on Wednesday’s BoC decision with a second cut almost fully priced and latest CFTC data showed that for futures at least, CAD net shorts reached new recent extremes at 47% of open interest.
  • We also expect a cut although think it’s a closer call than market pricing suggests – the MNI Preview will follow later.