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The Canadian dollar lost some ground after the not-so-good Canadian data. What’s next? Here is the view from Barclays, which sees further weakness for the C$.

Here is their view, courtesy of eFXnews:

Currency investors should consider buying USD/CAD* this week, advises Barclays Capital in its weekly FX pick to clients.

Barclays recommends buying USD/CAD via a call option for targeting 1.2540.

Barclays’ key rationale behind this call is to position fro a USD retracement and further re-pricing of October BoC hiking expectations.

“We see downside risks for the CAD into Governor Poloz’s Wednesday speech. Mr. Poloz will likely side with Deputy Governor Lane in noting that the BoC is assessing CAD strength in the context of subdued inflationary pressures. We expect markets to re-price the prospects of an October rate hike by the BoC and the CAD to weaken,” Barclays argues.

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