Goldman Sachs says Canadian dollar to fall
Goldman Sachs said to sell the Canadian dollar in a note yesterday, warning that the Bank of Canada is poised for a dovish shift.
"Unlike most of its G-10 peers, the BOC has not signaled a readiness to ease policy -- but we think that shift will be coming soon," strategists Zach Pandl and Karen Fishman wrote. "As an open economy with a substantial commodity sector, any further weakness in global growth should eventually weigh on Canadian output."
They set a target at 1.3600 with a stop at 1.3050.
The BOC meets Sept 4 and is a tough central bank to handicap because it's been silent since mid-July. The OIS market is pricing in a 14% chance of a surprise cut, rising to 72% in October.
The note is in contrast to Citi who was recently out with a note saying to buy the loonie:
We continue to believe that CAD will outperform the rest of the G10 commodity bloc. Strong domestic fundamentals, ties to a healthy US consumer, and less trade exposure than its peers suggests that the market is overestimating BoC cut risks this year.
They said to sell the pair at 1.3249 (spot at 1.3306 now) with a target of 1.3015 and a stop at 1.3375.
I spoke with Reuters about the Canadian dollar yesterday.
