Westpac are looking to enter a long CAD/JPY...>

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."