Synopsis:

ANZ sees Canadian dollar positioning stabilizing as broad USD longs unwind. While CAD remains vulnerable on EUR and CHF crosses, it may offer relative resilience versus AUD and NZD in a deteriorating risk environment.

Key Points:

• Positioning shift: Net long USD/CAD positions have declined to their lowest level since March 2024, reflecting a broader turn away from USD longs.

• Modest USD/CAD upside: A modest rebound into the low 1.40s is possible if tariff tensions escalate or risk sentiment deteriorates.

• Cross pressure: CAD is likely to underperform versus EUR and CHF, due to its strong correlation with USD on G10 crosses.

• Tactical long CAD setups: CAD could outperform AUD and NZD in risk-off growth environments, where AUD/CAD and NZD/CAD tend to fall sharply.

Conclusion:

While the CAD remains under cross-pressure, particularly versus European currencies, ANZ sees strategic long CAD opportunities on AUD and NZD crosses in the event of renewed risk aversion or global growth fears.