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Jul 12 - 01:24 PM
USD/CAD: A Break Below 1.30 To Accelerate Price Action Towards 1.26-1.25 - SocGen
First appeared on eFXplus on Jul 12 - 11:30 AM

Societe Generale Research discusses USD/CAD outlook and maintains a tactical bearish bias, expecting a move towards 1.26-1.25. SocGen prefers  to express such via a one-touch option structure. 

"North American central banks definitely out of sync and USD/CAD continues to lag the move lower in relative rates. While recession risks are threatening a slowing US economy, Canada is moving back up to its trend growth, with tariffs to have greater final impact on US and China. The North American divergence reflects the fact that the two countries are at different points in the economic cycle," SocGen notes.

"While equities are robust, a USD/CAD move towards 1.25 is possible. CAD options are cheaper than ever, and owning convexity is likely to bring value as soon as realised volatility picks up again, which is likely if the spot breaks below 1.30, as price action would accelerate," SocGen adds. 

Source:
Société Générale Research/Market Commentary

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