Long USD/CAD for target of 1.3930 – Deutsche Bank

The analysis team at Deutsche Bank suggests to go long on USD/CAD pair as their G10 trade idea of the week for the target of 1.3930 while entry point being 1.3635 and by maintaining a stop of 1.3570.

Key Quotes

“USD/CAD remains cheap against the two-year rate spread. As against Friday's repricing of the US front-end, we think there can be little doubt as to a Fed hike in June. Moreover, yesterday's news of a possible extension of OPEC production cuts is not material enough to lift the oil price sustainably. While USD/ CAD remains expensive against oil, it matters more that oil is still 20% overvalued against the broader dollar. Risks around a Toronto housing collapse and continued M&A outflows add to the tactical bearish case, and while CAD has been sold aggressively over the past fortnight, positioning is not stretched yet. We would therefore buy this morning's dip in USD/CAD.”