The Canadian dollar has been hit quite hard by the weak inflation figures. It is now facing a new test: the upcoming decision of the Bank of Canada. What is the best position for this event? Here is a preview the team at CIBC:
Here is their view, courtesy of eFXnews:
CIBC FX Strategy Research argues that market positioning points to an upcoming selloff in CAD.
“Long positions in the currency have been built up to their highest levels since 2012 on the assumption that the past two rapid-fire rate hikes were indicative of the future path of tightening. Look for a wind down in that positioning to add to the loonie’s underperformance in the coming months,†CIBC adds.
As a result, the dollar-Canada is likely to reach 1.27 by year-end, and average 1.29 in 2018. Things could, however, turn out worse for the currency should NAFTA trade talks fall apart.
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