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Apr 14 - 10:55 AM

CAD: BoC Supports Our Bullish CAD View; Staying Short USD/CAD For 1.2150 - MUFG

By eFXdata  —  Apr 14 - 09:30 AM

MUFG Research discusses its reaction to yesterday's BoC policy decision and maintains a short USD/CAD exposure in spot targeting a move towards 1.2150.

"The Canadian dollar has strengthened modestly following yesterday’s decision from the BoC to deliver a larger 50bps rate hike. Canadian dollar strength combined with the broad-based pullback for the US dollar resulted in USD/CAD dropping back to the 1.2550-level overnight after hitting a high yesterday ahead of the BoC policy meeting at 1.2676. The BoC’s decision to raise rates by a larger 50bps was already well priced in ahead of the meeting helping to dampen upside potential for the Canadian dollar from higher rates in Canada," MUFG notes. 

"Overall, the developments are supportive for our bullish outlook for the Canadian dollar although expectations for tighter policy are well priced in for now. Over the past month, USD/CAD performance has been more strongly correlated to global equity market performance rather than yields and oil prices. Further weakness equity market weakness is the main downside risk to our bullish Canadian dollar outlook," MUFG adds.

Source:
MUFG Research/Market Commentary

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