8 Jul 2015
Morgan Stanley: BoC expected to be dovish, Stay long USD/CAD – eFXnews
FXStreet (Barcelona) - The Morgan Stanley Research Team expects the Bank of Canada to maintain a dovish stance in its next week’s meeting, and further maintains a long USD/CAD position, targeting 1.30 levels, as noted by eFXnews.
Key Quotes
"With sharply falling commodity prices, Asia reporting asset volatility and weak economic data, it would take a hugely brave central bank to sound hawkish. The RBNZ illustrated what can happen when a bank stays too hawkish for too long," MS adds.
"The BoC should avoid this risk, we believe, suggesting an asymmetric market situation for the CAD. The chances of seeing the currency declining sharply, propelled by falling commodity prices and the BoC providing dovish signals are higher compared to the possibility of the CAD getting a boost by an overly confident central bank," MS argues.
"Markets will likely position for the asymmetry and sell the CAD ahead of next week’s BoC meeting, we believe," MS projects.
In line with this view, MS maintains a long USD/CAD position in its strategic portfolio. The trade opened at last Thursday NY close (7/2) from around 1.2540, with a stop at 1.24, and a target at 1.30.
This content has been provided under specific arrangement with eFXnews.
Key Quotes
"With sharply falling commodity prices, Asia reporting asset volatility and weak economic data, it would take a hugely brave central bank to sound hawkish. The RBNZ illustrated what can happen when a bank stays too hawkish for too long," MS adds.
"The BoC should avoid this risk, we believe, suggesting an asymmetric market situation for the CAD. The chances of seeing the currency declining sharply, propelled by falling commodity prices and the BoC providing dovish signals are higher compared to the possibility of the CAD getting a boost by an overly confident central bank," MS argues.
"Markets will likely position for the asymmetry and sell the CAD ahead of next week’s BoC meeting, we believe," MS projects.
In line with this view, MS maintains a long USD/CAD position in its strategic portfolio. The trade opened at last Thursday NY close (7/2) from around 1.2540, with a stop at 1.24, and a target at 1.30.
This content has been provided under specific arrangement with eFXnews.