Long AUD/CAD this week – RBC CM

Elsa Lignos, Senior Currency Strategist at RBC Capital Markets, suggests that they are long AUD/CAD this week, with a target of 1.01 and a stop at 0.9760.

Key Quotes 

“While data in Australia have been reasonably firm and in the RBA’s words “suggest that overall growth is continuing,” in Canada the BoC faces a different problem, with non-oil exports continuously disappointing, although the latest trade report saw better m/m performance.

The forward rate curve in Canada is almost entirely flat, so the risks around the BoC’s short statement tomorrow should be asymmetric to the downside. AUD/CAD also benefits if FX markets remain sensitive to outright yield as a performance driver”