CAD under pressure
Notwithstanding OPEC still to give it's verdict on production cuts, CAD looks ripe for some good shorting opportunities going forward. Expectations are for around 1 to 1.5 million bpd. Check out Justin's helpful post here on what to expect out of OPEC. We have had a bearish statement from the BOC on Wednesday and now Poloz has spoken yesterday and re-affirmed that position. Consequently Canadian stocks are getting hit and the odds of a rate hike next month out of Canada are getting hit. The Canadian overnight index swaps are pricing in just 3bps of tightening by the Bank of Canada's Jan meeting.
The BOC's rate hike cycle is now being questioned and there is some repositioning going on. The big factor for Canada is the fall in Oil prices. See here. The bottom line is that Poloz see's rates as 'appropriate for now' at 1.75%. He see's neutral in the 2.5-3.5% region, but Q4 growth see's a slowdown. See his speech yesterday here.
Here are some good pairs to trade.
CAD/JPY short on more risk off plays. Look for rejections of the 100 and 200 EMA on the 15 min and 60 min chart with risk off sentiment still in play.
USD/CAD long on return to 1.3340 at the 0.618 fib pull back.
NZD/CAD long from the 100 and 200 EMA level.
