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FOREX
FOREX: Westpac are looking to enter a long CAD/JPY position.
- Westpac writes that "CAD underperformance is overdone vis-a-vis a
fundamentally sound growth story and a BoC determined to return to neutral rate.
The 30% fall in energy prices from recent peaks and risk averse markets suggests
more attractive entry levels for CAD/JPY could emerge toward the Aug 2018 lows
of near Y83.80. Canada's solid growth story, one that has taken the economy to
full employment and nudged the BoC to adopt a more medium term focus on
returning back to neutral remains fundamentally intact; Yet markets have
tempered BoC hike expectations to a little more than two hikes by end-2019, a
13mth period that encompasses 4 MPR updates; that would be a slower pace of
hikes than 2018 yet the BoC has openly mused it could if anything quicken the
pace on the path to neutral. Newly elected house Democrats have signalled USMCA
is unlikely to pass without some changes but that should not be a deal breaker."
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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