Citi: CAD is a good relative-value play against AUD and NZD

Citi on the commodity currencies

Citi Research discussed CAD outlook and maintains a tactical bullish bias, and likes short AUD/CAD and NZD/CAD as relative value trades.

"BoC leaves guidance unchanged as conditions do not yet warrant cuts - BoC leaves policy rates unchanged, with the statement seen as a "hawkish surprise" as guidance is unchanged in indicating that "the current degree of monetary policy stimulus remains appropriate". The statement does acknowledge increasing downside risks from trade disputes but says domestic activity is currently operating close to potential and inflation is around target," Citi notes.

"Overall, Citi analysts see the BoC's September decision as consistent with a still data-dependent central bank hesitant to add further accommodation if current conditions hold that suggests little need for cuts this year. This likely leaves the bullish sentiment on CAD intact as a relative value play against its commodity peers (AUD & NZD) as well as against Asia EM FX," Citi adds.

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