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USDCAD Slide Continues After Clearing Day's Second Support

CANADA
  • USDCAD dips under 1.345 (-0.9%) having pushed through the second support level of the day at 1.3485 (May 23 low), as CAD and AUD outperform amidst the broader pullback for the greenback with equities continuing an increase since the open.
  • It next opens 1.3404 (May 16 low) seen after stronger than expected CAD CPI inflation.
  • GoCs are relatively ambivalent to the rally in Tsys, extending the narrowing in the 2Y Can-US spread to -13bps with 2Y GoCs +0.2bps vs -5.4bps for Tsys (and with OIS pricing seeing next week’s BOC decision as a 1/3 odds of a 25bp hike vs ¼ for the FOMC in two weeks).
  • Depending on changes in positioning in the interim period, if CFTC net shorts blowing back out to -30.5% of OI back as of May 23 is broadly indicative, today's further move after yesterday's decline from 1.365 could be squeezing some of these CAD shorts.

Source: Bloomberg

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