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FxWirePro: AUD/CAD bearish trade setup via 6m debit put spread

In this write-up, we emphasize on our medium-term bearish AUDCAD trade, structured as a 6m put spread, is predicated on policy rate and commodity divergence.

However, the trade has underperformed to-date in part on a more general underperformance of CAD on a multitude of non-USD crosses.

The trade reads this way: Long a 6m 1.0090-0.9120 AUD put/CAD call spread. Marked 0.15%.

We think this is most likely due to below-stated factors that should fade in the coming months and continue to hold the position.

1) NAFTA renegotiations break down and breakup fears return

2) Aussie the unemployment rate moves back towards 5.75%, raising risks that the RBA responds to a weakening labor market;

3) China data weaken materially; or

4) The risk markets retrace and vol rises as financial conditions tighten.

But Bullish AUDCAD scenarios are driven by following factors:

1) Local crude oil prices rise sustainably above $60/bbl triggering a renewed investment cycle

2) Severe deterioration of US politics and geopolitics dent US growth expectations and further widen out the broad dollar discount much further.

Currency Strength Index: FxWirePro's hourly AUD spot index is flashing at -42 levels (which is bearish), while hourly CAD spot index was at -140 (highly bearish) while articulating at 11:39 GMT. For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit: 

http://www.fxwirepro.com/invest

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June 18 15:00 UTC Released

USExp Soybean Inspected

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369.969 M

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January 22 19:00 UTC 211804211804m

ARTrade Balance

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-1541 %

January 31 00:00 UTC 199984199984m

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2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 199984199984m

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2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 199984199984m

ARAnnual Primary Balance*

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2016 bln ARS

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Bln AR bln ARS

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