Westpac sees 1.40+ in the next 1-3 months
Westpac analysts hold a long USD/CAD trade from 1.3584 (spot at 1.3727) and have moved the stop up to breakeven.
"Our model, macro and technical signals continue to prescribe USD/CAD longs. We are long from 1.3584 and tighten the stop to entry. Few if any redeeming features for CAD right here, yield support for the currency notably down sharply (-40bp in the 2yr part of the curve in the last few weeks), with no obvious bottom in sight. Positioning no barrier either, CFTC spec shorts barely half their summer peak level. Gov Poloz continues to take a "glass half-full" approach but he should be forced into a reappraisal as the terms of trade continues to bleed through the economy into 2016. 1.40+ achievable on a 1-3mth horizon," they write.
They are cautious for a near-term pullback but say every signal in their FX model points lower for CAD.
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