Credit Suisse maintains a bullish bias on USD/CAD targeting a move towards 1.41 by year-end.
"Front -end USDCAD risk reversal skews have eased over the past 2 weeks, following a period of considerable larger premium for calls over puts:.. CAD has also seen a considerable repricing in monetary policy expectations of late, largely on the back of the hawkish speech by BoC chief Macklem on 6 Oct. Since then, the terminal rate implied by the OIS market has risen from around 3.80 -3.90% to around 4.30% at the time of writing. T," CS notes.
"The path of least resistance in USDCAD will remain to the upside, towards our end -Q4 target at 1.4100," CS adds.