Menu

Search

Menu

Search

FxWirePro: BoC and USMCA continue to drive loony - Optionality for encouraging USD/CAD longs

The USDCAD longs are adjusted, stopped higher on account of the range-break higher following the BoC’s abandonment of its hiking bias. The new stop could not withstand the torrid drop in US short-end rates that ensued in the wake of two poor US inflation prints leading into the FOMC, even despite Canada printing its fourth monthly contractionary GDP print in the last half year.

Yet with the FOMC pouring cold water on any market hope of an insurance cut, USDCAD has resumed its climb higher and back out of the range in which it was encapsulated since early March. And, with Canada's manufacturing PMI contracting for the first time in three years, we are still biased towards further topside on the pair as the 2Q recovery that the BoC anticipates is already off to a tepid start. 

Elsewhere, positive (if misunderstood) headlines this week surrounding USMCA passage prospects appeared to cause a quick but notable knee-jerk move lower in the pair. This would affirm our belief that the market should be increasingly sensitive to news surrounding the fate of the trade pact (and should theoretically be more sensitive to negative news in particular, which we anticipate based on current political signals).

Thus, volatility surrounding USMCA looks set to feature more prominently in the coming weeks and which we feel is biased towards pushing USDCAD higher, leaving us well-positioned with our one-touch USDCAD call option.

Trade updates: 

Booked USDCAD longs at 1.3364 at the beginning of March. Squared out at 1.3390 for a profit of 0.31%. Instead, added longs in a 3m USDCAD 1.40 one-touch. Paid 16.70% as part of a calendar spread. Marked at 16.72%. Courtesy: JPM

Currency Strength Index: FxWirePro's hourly CAD spot index is inching towards -22 levels (which is mildly bearish), USD is at 18 (mildly bullish), while articulating (at 13:21 GMT). 

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex

  • ET PRO
  • Market Data

Market-moving news and views, 24 hours a day >

July 2 15:00 UTC Released

DKCurrency Reserves

Actual

449.6 Stale

Forecast

Previous

451.7 Stale

July 2 13:45 UTC Released

USISM NY Biz Conditions

Actual

50 %

Forecast

Previous

48.6 %

January 31 00:00 UTC 773355773355m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 773355773355m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 785175785175m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 773355773355m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 22 19:00 UTC 785175785175m

ARTrade Balance

Actual

Forecast

Previous

-1541 %

January 31 00:00 UTC 773355773355m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 773355773355m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 773355773355m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.