Morgan Stanley say they "continue to like tactical CAD longs, particularly against low yielding currencies like CHF"
MS citing:
- BoC Business Outlook Survey suggested that investment trends remained strong and that inflationary pressures continued to build."
And more via MS economists
- "Canadian growth and inflation data tracking broadly in line with the BoC's outlook could form a case for a rate hike at the April meeting
- The market is only pricing in a 14% likelihood of a rate move in April, creating upside risks for CAD
- In addition, constructive news over NAFTA negotiations suggests the US may be approaching an acceptable agreement with its trading partners, which should lead to a re-pricing of the trade risk premium in CAD
- CHF should stay on the back foot given our expectation for a risk rebound, with SNB policymakers including Maechler and Moser suggesting the central bank will remain cautious for the time being
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Morgan Stanley entered a short CHF, long CAD position at the NY close on Thursday,
- target of 1.26
- stop at 1.33
- The risk to the trade is a dovish shift from the BoC, leading to CAD weakness"
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Chart (not from MS)
