Limited scope for further CAD selling; for AUD focus On China data - MUFG
CAD and AUD strategy
MUFG Research discusses CAD and AUD tactical outlook, and adopts a neutral bias in the near-term.
"CAD: Our regression model incorporating rate spreads and the price of crude oil points to CAD underperforming. Much of the 10% gain in NYMEX crude oil since mid-March has failed to lift the Canadian dollar.
Indeed, incorporating a +/-2 standard deviation band, USD/CAD is now
at the high end of short-term fair-value band. So assuming there is no
notable upturn in broader US dollar sentiment, we see limited scope for further CAD selling from here," MUFG notes.
"AUD: Attention now turns to China data for the Aussie, with GDP, retail sales and industrial production data all released tomorrow. The Aussie has been trading in a relatively tight range between the 0.7200 and 0.7000 levels the past two months.
If tomorrow's data surprises on the upside, it could face
impetus to head further towards the 0.7200 level or above, especially if
the positive momentum in the US-China trade negotiations continue," MUFG adds.