A look at FX from ANZ, the bank recommend being short AUD / CAD
The argument from ANZ is they expect a rate cut from the Reserve Bank of Australia next week (Bank meet May 7)
- history tells us that RBA easing in similar environments still produced a persistent negative reaction in the currency
ANZ note the level of short positioning in futures
- would typically temper the downside
- but we think this is less of a factor as other indicators like the risk reversal are pointing in the opposite direction.
And:
- We also don't think that this positioning would be substantially unwound in the case of 'no cut' as inaction will be perceived only as a delay.
Recommendation
- We recommend selling AUD/CAD at 0.9439, with a target of 0.91.
- We will reassess at 0.9650.
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Daily candle AUD/CAD
