The Canadian dollar consolidated its gains after the big move seen beforehand, thanks to the BOC. What’s next? The team at SocGen sees opportunities in favor of the loonie, and not only against the greenback.
Here is their view, courtesy of eFXnews:
Societe Generale Cross Asset Strategy Research argues that USD/CAD price action still has room towards the bottom.
“Our technical analysts warned that breaking below 1.24 would be pivotal. This corresponded to the rates repricing and triggered the latest wave of weakness, still on its way to pressure the USD/CAD towards its next major support (2015 low) in the 1.2050/1.19 region,” SocGen projects.
“In the commodity currencies bloc, the CAD is close to fair value but the risk of a spike higher is greater for it than for the AUD or even the NZD). In particular, the Australian dollar is largely overvalued, suggesting that short AUD/CAD is an attractive valuation-based relative value trade,” SocGen advises.
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