USD/CAD flat at 1.4250 today
Morgan Stanley maintains a long USD/CAD position in its strategic portfolio. The trade entered after NY close on November 19, 2015 from around 1.3287, with an initial target at 1.40 and an initial stop at 1.3050. MS made a series of adjustments to the trade's stops (1.3930 last) and targets (1.45 last).
Here is MS' recent view on the trade:
Even though the Canadian labour market report released last Friday showed strength outside the energy sector, we see a rising risk of the BoC sending a more dovish message at the January 20th policy meeting.
Other data show growing evidence that the negative impact of the oil price shock spreading into the non-resource sector, challenging the BoC's scenario in which non-resource manufacturing will pick up the slack from the energy sector. The sharper-than-expected drop in December housing starts and deteriorating consumer confidence across provinces increase the odds of a rate cut. The CAD stays as our preferred short now, and USDCAD is quickly reaching our 1.45 target," MS argues
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