Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
BOJ Holds Interest Rates Steady, Upgrades Growth and Inflation Outlook for Japan 
Stock Futures Dip as Investors Await Key Payrolls Data 
RBA Expected to Raise Interest Rates by 25 Basis Points in February, ANZ Forecast Says 
Geopolitical Shocks That Could Reshape Financial Markets in 2025 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Bank of Canada Holds Interest Rate at 2.25% Amid Trade and Global Uncertainty 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
Bank of Korea Expected to Hold Interest Rates as Weak Won Limits Policy Easing 
Along similar lines of EURUSD, we also like EUR call/CAD put flies.
The macro view on CAD is negative on a mix of BoC dovishness, sensitivity to NAFTA renegotiation talk which is likely to re-enter headlines over the next few weeks, and the potential for further near-term slippage in oil prices.
We introduce a Bank of Canada rate hike forecast for 3Q18 but would need to see a shift in tone to move it forward
Despite a strong run of Canadian data, the Bank of Canada has retained a dovish tone in its communications in recent months. This week continued that pattern, with Governor Poloz reiterating his belief that the Canadian output gap remains large, but January GDP subsequently surprised strongly to the upside. Our nowcaster now looks for 4.8% SAAR GDP growth in 1Q; we raise our forecast to a more cautious--but still robust--3.8%.
Hence, option pricing heavily favors EUR call/CAD put fly ownership, which are near 3y lows in premium (refer above chart).
2M 1.46 – 1.49 with 1.52 RKI –1.52 EUR call/CAD put flies indicatively cost at 35 bp EUR (spot ref. 1.4260, max payout ratio 5.8 times if RKI triggered, 11.4 times if not).
